Bank of Israel publishes first quarter foreign exchange market data showing shekel up 0.8 percent against the US dollar and volatility rising

The Bank of Israel published first quarter 2026 foreign exchange market data showing the shekel strengthened while shekel dollar volatility increased. During the quarter, the shekel appreciated by about 0.8 percent against the US dollar, 2.9 percent against the euro, and 1.9 percent in nominal effective terms against the currencies of Israel’s main trading partners, even as the dollar strengthened globally. Actual volatility in the shekel dollar rate rose by 0.3 percentage points to an average of 8.4 percent, and implied volatility in over the counter shekel dollar options increased by 0.9 percentage points to about 9.7 percent at the end of the quarter. The release linked the rise in actual volatility to Operation Roaring Lion, Israel’s campaign against Iran. Segment data showed net foreign exchange purchases by nonresidents of about USD 6.6 billion, up from USD 1.8 billion in the previous quarter, while institutional investors made net sales of about USD 5.2 billion, businesses shifted to net sales of about USD 1.4 billion from purchases of about USD 5.6 billion in the previous quarter, and the financial sector made net sales of about USD 0.2 billion. Average daily trading volume vis a vis the domestic banking system increased 8.5 percent to USD 16.2 billion, mainly due to swap transactions. Nonresidents’ share of total trading volume with the domestic banking system fell by about 1 percentage point to about 40.6 percent, while in estimated total spot and forward transactions against the shekel, excluding swaps and options, nonresidents accounted for about 88 percent of volume and trade between nonresidents represented about 79 percent, with a daily average of about USD 21.3 billion.