Report published September 25, 2026
USDILS: Bumpy Road to Eventually Stronger Shekel – UBS FX Strategy
UBS · September 25, 2026
UBS expects USDILS to tread a bumpy path before strengthening gradually toward 2.85 by 3Q27 from 3.03 currently. Near-term gains are capped by central bank divergence and BoI caution, but long-term gains will be driven by tech-related institutional hedging flows and resilient Israeli fundamentals.
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Finvaulta summarizes UBS's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Key Takeaways
- 1.Near-term shekel appreciation is constrained by Fed hiking expectations and the Bank of Israel's preference to avoid excessive ILS strength.
- 2.Medium-term fundamentals, institutional hedging of US tech equities, and solid domestic growth support a stronger shekel, with USDILS forecast to decline to 2.85 by 3Q27.
- 3.Key risks to the currency outlook include a sustained tech stock correction, unexpected monetary divergence, upcoming legislative elections on 27 October, and lingering security dynamics.
Table of Contents
- Our view and risks
- Key drivers
- Factors to watch
Report data
Figure 1 - USDILS: Exchange rate (incl. forward rates), CIO forecast, and volatility range — as of September 25, 2026.
| Metric | Estimate | Context |
|---|---|---|
| USDILS Spot Rate | 3.03 ILS per USD | Current spot exchange rate as of report date |
| USDILS Forecast Dec 2026 | 2.95 ILS per USD | CIO end-of-quarter forecast for USDILS |
| USDILS Forecast Sep 2027 | 2.85 ILS per USD | CIO end-of-quarter forecast for USDILS through 3Q27 |
| Bank of Israel Policy Rate | 3.25% | Bank of Israel cut policy rate by 25bps in early September |
| Israel Real GDP Growth (annualized) | 14.9% | Second reading of real GDP growth in 2Q26 reflecting rebound from weak 1Q |
Reports in this series
CIO View is shown in chronological order through this edition, published on September 25, 2026.
Part of the CIO View series — view all 59 editions
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