The Bank of Israel published foreign exchange market data for the third quarter of 2026, showing a weaker shekel and lower average daily trading volumes. The shekel depreciated by approximately 2.9% against the US dollar and 2.4% against the euro. Its nominal effective exchange rate against the currencies of Israel's main trading partners weakened by about 2.8%, while the dollar's performance against major currencies was mixed. Actual volatility in the shekel's exchange rate against the dollar declined by 1.7 percentage points to an average of 9.0%. By contrast, average implied volatility in over-the-counter options, an indicator of expected exchange rate volatility, increased by 0.1 percentage points to about 10.1% at quarter end. This increase contrasted with declines in implied foreign exchange volatility in both emerging markets and advanced economies. Average daily trading volume with the domestic banking system fell by about 9.1% to USD 16 billion, mainly reflecting lower spot and forward activity. Nonresidents' share of that trading rose by 5.2 percentage points to about 41.4%. Institutional investors reduced net foreign exchange sales to approximately USD 4.4 billion from USD 13.8 billion in the previous quarter, while nonresidents' net sales remained broadly stable at USD 6.5 billion. The Bank of Israel made no net foreign exchange purchases during the quarter, compared with USD 1.8 billion in the preceding quarter.

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