Shekel sharply falls against dollar - what will happen to prices in Israel now

The shekel has noticeably weakened against the dollar, approaching its lowest levels in two months. The Bank of Israel set the exchange rate at 3.066 shekels per dollar. The weakening is linked to the dollar's strength in global markets, interest rate differentials, and geopolitical tensions. Experts explain the impact on imported goods and travel but do not consider further decline inevitable.

The shekel has sharply weakened against the dollar, approaching its lowest levels in the past two months. On October 1, the Bank of Israel set the representative exchange rate at 3.066 shekels per dollar, 1.088% higher than the previous value. Later, the US currency continued to strengthen and for the first time since July crossed the 3.07 shekel mark. Several factors are simultaneously affecting the currency market: the dollar's strengthening in global markets, the widening interest rate gap between the US and Israel, high yields on US government bonds, and ongoing tensions in the Middle East. Ilan Gildin, a partner at Karni Family Office, links the situation to a combination of financial and geopolitical factors. Houthi attacks on Saudi Arabia and fears of escalation with Iran are increasing regional risks. Oil rose by about 1.8% after the failure of US-Iran talks. For ordinary Israelis, the shekel's weakening means reduced purchasing power for dollar-denominated expenses — a $1,000 purchase now costs 3,070 shekels instead of 3,000. Foreign travel, airline tickets, and digital subscriptions may become more expensive. A prolonged weakening could affect prices inside Israel due to imports. However, experts do not consider further decline inevitable thanks to the current account surplus and the Bank of Israel's foreign exchange reserves.