The USD to ILS exchange rate has become increasingly stable around the 3.3360 mark, which is approximately 1.5% below its three-month average of 3.386. This rate has demonstrated volatility, trading within an 8.5% range, from a low of 3.3170 to a high of 3.5985. Recent forecasts suggest a robust outlook for the Israeli New Shekel (ILS), which has appreciated significantly against the US dollar, attributed to diminished geopolitical risks and strong economic fundamentals in Israel.
Analysts at UBS have revised their projections for the USD/ILS exchange rate, anticipating it will drop to 3.30 by the end of this quarter and further decline to 3.20 by the second quarter of 2026. This bullish sentiment towards the ILS comes amid an influx of foreign investment, amounting to around $8.5 billion in Israeli capital markets since the beginning of 2025—evidence of growing investor confidence.
On the US dollar's side, despite rising inflation rates, which reached a seven-month high in August, investor sentiment remains cautious. Markets continue to price in several interest rate cuts likely through the remainder of 2025. This sentiment may undergo adjustments following upcoming inflation data and consumer sentiment reports, which could exert additional pressure on the USD.
Further complicating the USD's outlook are global events such as trade tensions with China and the pressures of dedollarization, which may influence the demand for the US dollar as a reserve currency. Additionally, any changes in Federal Reserve leadership and policy directions could also sway future USD valuations.
Overall, the USD/ILS exchange rate appears to be influenced by a confluence of staple economic dynamics and geopolitical factors. Investors should remain attentive to upcoming data releases and market reactions, as these developments could signal further shifts in the exchange rate landscape.
