Shekel falls sharply against US dollar as Trump’s latest tariffs take effect

The Israeli shekel weakens sharply and local shares drop as a wave of US tariffs takes effect against dozens of trading partners, and as US President Donald Trump takes specific aim at China, igniting investor concern over a global trade war intensifying.

The shekel depreciates more than 1 percent against the US dollar, trading around NIS 3.82, and almost 2% against the euro to NIS 4.22 earlier this morning.

The Tel Aviv Stock Exchange’s benchmark TA-125 index falls 1%. The TA-35 index of blue-chip companies is down 0.9%. The TA-90 index, which tracks the shares with the highest capitalization not included in the TA-35 index, declines 1.3%, and the TA-Insurance and Financial Services index retreats 1%. Shares in Asia and Europe continue to fall after US stock indexes dropped on Tuesday.

The market reaction comes “against the backdrop of Trump’s tariff plan coming into effect and the US’s fierce confrontation with China,” says Mizrahi Tefahot Bank’s chief markets economist, Ronen Menahem.

“The shekel has crossed the NIS 3.81 mark against the dollar, a level not seen since August 2024, at the height of the fighting on the northern front,” says Menahem. “In the past week alone, the shekel weakened by 3.2% against the dollar and 5.8% against the euro.”

Menahem explains that the Trump tariff effect, pulling stock indexes down on Wall Street, is lowering the value of US securities held by Israeli financial institutions.

“As a result local financial institutions need to rebalance their dollar exposure, which means that they need to buy dollars and sell the local currency,” says Menahem.