Israeli Shekel Strengthens to 33-Year High

2026-05-25 13:59 By Agna Gabriel 1 min. read

The Israeli shekel strengthened to around $2.88, its strongest level since 1993, after a massive 20% appreciation over the past year.

In May, the Bank of Israel cut its benchmark interest rate by 25 bps to 3.75%, in line with expectations, citing stabilising inflation, a stronger shekel and signs that Washington and Tehran are moving closer to extending their ceasefire and reopening the Strait of Hormuz.

Further supporting the rate cut was a narrowing 12-month rolling fiscal deficit, which contracted to 3.8% of gross domestic product in April.

According to a Bank of Israel survey published on May 19, average inflation expectations for the next 12 months fell to 1.8% from 2.3%, safely hitting the midpoint of the government's 1% to 3% target range.

Policymakers are now expected to deliver one or two more rate cuts before year end as the economy continues to recover slowly from the conflict with Iran.



News Stream
Israeli Shekel Strengthens to 33-Year High
The Israeli shekel strengthened to around $2.88, its strongest level since 1993, after a massive 20% appreciation over the past year. In May, the Bank of Israel cut its benchmark interest rate by 25 bps to 3.75%, in line with expectations, citing stabilising inflation, a stronger shekel and signs that Washington and Tehran are moving closer to extending their ceasefire and reopening the Strait of Hormuz. Further supporting the rate cut was a narrowing 12-month rolling fiscal deficit, which contracted to 3.8% of gross domestic product in April. According to a Bank of Israel survey published on May 19, average inflation expectations for the next 12 months fell to 1.8% from 2.3%, safely hitting the midpoint of the government's 1% to 3% target range. Policymakers are now expected to deliver one or two more rate cuts before year end as the economy continues to recover slowly from the conflict with Iran.
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