The Bank of Israel published its quarterly update on Israel’s foreign currency market, showing the shekel weakened against both the US dollar and the euro in the first quarter of 2025, alongside a further decline in shekel-dollar exchange rate volatility. The release also sets out estimated net flows by key market segments and trading-volume trends versus the domestic banking system. Over the quarter, the shekel depreciated by about 2 percent against the US dollar and 6 percent against the euro, and weakened by 3.7 percent in nominal effective terms versus the currencies of Israel’s main trading partners. Actual shekel-dollar volatility fell by 1.5 percentage points to an average of 8.2 percent, while implied volatility in over-the-counter shekel-dollar options declined by 1.5 percentage points to about 8.7 percent by quarter-end. Estimated net activity indicated institutional investors bought USD 2.9 billion and the financial sector bought USD 2.1 billion, while nonresidents sold USD 2.9 billion and the business sector sold USD 2.3 billion; average daily trading volume rose 0.6 percent to USD 13.3 billion, driven mainly by higher swap activity, and nonresidents’ share of total volume versus the domestic banking system fell 0.9 percentage points to about 40.4 percent.

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