Full press release, including graphs and data
- Exchange Rate Development
A weakening of the shekel alongside a weakening of the dollar worldwide.
During the course of the first quarter of 2025, the shekel weakened by about 2 percent against the US dollar, and by 6 percent against the euro, in contrast to the final quarter of 2024. In addition, the shekel weakened by 3.7 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).
In contrast, from the beginning of the year, the dollar weakened against most of the world’s major currencies (Figure 2), due as well to the lack of certainty related to the tariff policy in the US. Among other things, the dollar weakened by approximately 4.6 percent against the Japanese yen and by 3.8 percent against the euro.
- Exchange Rate Volatility
Continued decline in actual volatility alongside a decline in implied volatility
The average standard deviation of changes in the shekel/dollar exchange rate, which represents its actual volatility, declined by 1.5 percentage points during the quarter, to an average level of 8.2 percent.
The average implied volatility in over-the-counter shekel/dollar options—those traded outside the stock exchange—which is an indication of expected exchange rate volatility, decreased by 1.5 percent during the quarter, to an average level of about 8.7 percentage points at the end of the quarter.
This is alongside the average level of implied volatility in foreign exchange options in emerging markets, which decreased by 0.7 percentage points compared to the previous quarter, to 10.3 percent at the end of the quarter. In advanced economies, there was a moderate increase of about 0.1 percent in its average level, to 8.2 percent at the end of the quarter (Figure 4).
An estimate of activity by the main segments in the foreign exchange market indicates that during the First quarter institutional investors (pension funds, provident funds, and insurance companies) purchased $2.9 billion and the financial sector purchased $2.1 billion. In contrast, nonresidents sold $2.9 billion and the business sector sold $2.3 billion.
- Trading Volume in the Foreign Currency Market—Tables and Figures
Trading volume vis-à-vis the domestic banking system[1]
The average daily trading volume increased moderately by about 0.6 percent during the quarter to $13.3 billion, with most of the increase deriving from an increase in the daily trading volume in swap transactions.
Nonresidents' share of total trading volume vis-à-vis the domestic banking system (spot and forward transactions, options, and swaps) declined by about 0.9 percentage points to about 40.4 percent at the end of the first quarter.
[1] From the beginning of 2020, the data do not include branches of foreign banks in Israel.
[1] For additional information on the segments’ activity in the foreign exchange market, see “Statistical Bulletin 2024—Chapter D” (translation forthcoming).
https://www.boi.org.il/publications/regularpublications/statistic_bulletin/bulletin2024/
[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 (forthcoming):