Israel’s foreign currency market in the second quarter of 2020
1. The Exchange Rate
Strengthening of the shekel against the dollar, further to the long-term trend.
During the course of the second quarter, the shekel strengthened by approximately 2.8 percent against the dollar, and by 0.5 percent against the euro, in contrast with the weakening of the shekel in the first quarter of the year in view of the corona crisis.
Against the currencies of Israel's main trading partners, in terms of the nominal effective exchange rate of the shekel (i.e., the trade-weighted average shekel exchange rate against those currencies), the shekel strengthened by approximately 1.6 percent. This is further to the long-term trend as reflected in Figure 1.
Following surplus demand for dollars at the end of the first quarter, which led to the dollar strengthening against most currencies in view of the corona crisis, the dollar weakened in the second quarter against most major currencies—other than the British pound against which the dollar strengthened by about 0.5 percent (Figure 2).