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Figures and data

 

  1. Exchange Rate Development

 

A strengthening of the shekel against the background of a weakening of the dollar worldwide.

 

In the second quarter of 2025, the shekel strengthened markedly, in view of improving investor sentiment after the events of Operation Rising Lion and the weakening of the dollar against major currencies worldwide. During the course of the quarter, the shekel strengthened by approximately 9.3 percent vis-à-vis the dollar and by 1.5 percent vis-à-vis the euro. In addition, the shekel strengthened by 6 percent against the currencies of Israel's main trading partners, in terms of the nominal effective exchange rate (i.e., the trade-weighted average shekel exchange rate against those currencies).

 


Worldwide, the trend of dollar weakness continued, in view of the tension over the global trade war, and the continued lack of certainty over the US tariff policy. Among other things, the dollar weakened during the course of the quarter by 3.4 percent against the Japanese yen and by 7.8 percent against the euro (Figure 2).

 

 

  1. Exchange Rate Volatility

 

Increase in actual volatility alongside an increase in implied volatility

 

The average standard deviation of changes in the shekel/dollar exchange rate, which represents its actual volatility, increased by 3 percentage points during the quarter, to an average level of 11.1 percent.

 

The average implied volatility in over-the-counter shekel/dollar options —an indicator of expected exchange-rate volatility— increased by 1.1 percentage points during the quarter, to an average level of about 9.8 percent at the end of the quarter.

 

This is alongside the average level of implied volatility in foreign exchange options in emerging markets, which increased by 0.8 percentage points compared to the previous quarter, to 11.1 percent at the end of the quarter. In advanced economies, there was a moderate increase of about 0.8 percent in its average level, to about 9 percent at the end of the quarter (Figure 4).

 

 

  1. The Activity of the Main Segments in the Foreign Exchange Market[1],[2]

 

An estimate of activity by the main segments in the foreign exchange market points to heterogeneous developments: net FX sales by nonresidents and by the financial sector, which supported the shekel’s appreciation, versus FX purchases by the business sector. Nonresidents sold $8.9 billion in foreign exchange, while the business sector purchased about $5.3 billion in foreign exchange, due to an increase in net purchases by major importing companies and more moderate sales among exporting companies compared to the previous quarter. Among institutional investors (pension funds, provident funds, and insurance companies) there was moderate activity, as they purchased only $0.1 billion in foreign exchange during the second quarter. In contrast, the financial sector (mainly banks) sold about $0.2 billion in foreign exchange.

 

 

  1. Trading Volume in the Foreign Currency Market—Tables and Figures

 

Trading volume vis-à-vis the domestic banking system[3]

 

The average daily trading volume increased by about 6 percent during the quarter to $14 billion, with most of the increase deriving from an increase in the daily trading volume in spot and forward transactions.

 

Nonresidents' share of total trading volume vis-à-vis the domestic banking system (spot and forward transactions, options, and swaps) declined by about 1.2 percentage points to about 39.12 percent at the end of the second quarter.

 

 

 

 

 

 

 Conversions (1)

 Swaps1 (2)

 Cross Currency swap2 (3)

 Options3 (4)

Total volume of trade (1)+(2)+(3)+(4)

 

Second quarter 2025 (Not final)

Total

223,650

588,999

2,407

40,495

855,551

 

 Daily average (59 days)

3,666

9,656

39

664

14,025

 

Nonresidents

75,797

243,946

857

14,059

334,659

 

 of which Foreign financial institutions

75,100

243,946

857

14,059

333,961

 

Residents

147,853

345,053

1,550

26,436

520,892

 

 of which Real sector

47,625

26,938

410

8,589

83,560

 

                 Financial sector

42,515

139,701

575

1,148

183,940

 

                 Institutions (incl. insurance companies)

29,109

134,097

160

8,921

172,286

 

                 Individuals

5,696

202

0

122

6,021

 

                Other4

698

0

0

0

698

 

                Domestic banks5

11,180

26,154

26

2,831

40,191

 

First quarter 2025

Total

192,050

599,375

1,919

26,953

820,297

 

 Daily average (61 days)

3,098

9,667

31

435

13,231

 

Nonresidents

62,964

260,197

764

7,389

331,314

 

 of which Foreign financial institutions

62,394

260,196

764

7,389

330,743

 

Residents

129,086

339,178

1,155

19,564

488,983

 

 of which Real sector

41,844

24,572

361

8,139

74,916

 

                 Financial sector

39,185

163,589

138

1,342

204,254

 

                 Institutions (incl. insurance companies)

26,079

115,262

52

7,195

148,587

 

                 Individuals

5,077

221

0

167

5,465

 

                Other4

570

1

0

0

571

 

                Domestic banks5

8,079

21,270

207

1,827

31,384

 

              

1  Only one leg of the swap, i.e., the nominal value of the transaction (in accordance with the BIS definition)

 

2 The exchanged founds through Cross Currency Swap transactions considered for the volume, as one leg only in cases where the two legs offset each other.

 

3 The national value, that includes purchases and sales of put and call options.

 

4 Including other entities such as portfolio managers, nonprofit organizations, national institutions, and those not included elsewhere.

 

5 Total interbank trade, divided by 2

 
                 

 

 

 

Estimated total trading volume[4]—domestic banking system and foreign reporting entities

 

The estimated total activity in transactions against the shekel, as reflected in reports from the domestic banking system and foreign reporting entities, indicates that nonresidents’ relative share of trading volume in spot and forward transactions (excluding swaps and options) was about 86 percent in the second quarter.

Trade between nonresidents constituted about 77 percent of the volume, which had a daily average of about $16.5 billion.

 

 

 

 

Relative share of total trading volume

 

 

 

 

Trade between nonresidents

Trade between a nonresident and a resident1

Trade between the domestic banking system and residents

Total volume ($ million)

Daily average ($ million)

2025-Q2
(Tentative figure)

Trading volume in spot and forward transactions

77.1%

9.0%

13.9%

568,113

9,313

Trading volume in swap and options transactions

49.4%

24.0%

26.6%

902,726

14,799

2025-Q1

Trading volume in spot and forward transactions

77.0%

9.0%

14.0%

1,011,645

16,317

Trading volume in swap and options transactions

52.3%

21.4%

26.3%

1,375,130

22,180

1 Trade between a nonresident and a resident includes: (a) reports by foreign reporting entities regarding transactions with residents; and (b) reports by domestic banks regarding transactions with nonresidents.

 

 

[1] For additional information on the segments’ activity in the foreign exchange market, see “Statistical Bulletin 2024—Chapter D”.

https://www.boi.org.il/en/communication-and-publications/regular-publications/statistical-publications/statistical-bulletin-2024/

[2] The main segments presented do not make up the entire market—for additional information, see the section on “The Database of Foreign Exchange Market Activity” in the Bank of Israel's "Statistical Bulletin" for 2024

https://www.boi.org.il/en/communication-and-publications/regular-publications/statistical-publications/statistical-bulletin-2024/

 

[3] From the beginning of 2020, the data do not include branches of foreign banks in Israel.

[4] Total trading volume is an estimate of total activity in transactions against the shekel, based on reports by the domestic banking system and by foreign reporting entities.