Israeli Shekel Drops as Election Stalemate Spooks Investors

The Israeli shekel experienced a sharp devaluation against the US dollar and the euro on October 28, 2026, as an election stalemate eroded investor confidence. With approximately 77% of votes counted, the shekel-dollar exchange rate rose 1.93% to NIS 3.113/$, while the shekel-euro rate climbed 1.87% to NIS 3.452/€.

Bank Mizrahi-Tefahot attributed the volatility to significant activity by foreign entities and investors, noting that the foreign exchange market typically reacts sharply to economic events and elections. Analysts expect the currency to remain volatile throughout upcoming coalition negotiations, influenced further by regional security, US stock market reports, and the US midterm elections.

Experts from the International School of Ono Academic College highlighted the role of institutional hedging and foreign investor activity in driving the decline. Some projections suggest a long-term weakening trend, with the shekel potentially moving toward an exchange rate of at least NIS 3.3/$.