Israel: A Counter Intuitive Country

Two weeks ago, someone came up to me and asked if I knew the reason the Israeli Shekel was so strong and is among the five strongest currencies in the world. I responded by saying that I could not give him a reason except to say that Israel is a counterintuitive country who operating statistics are totally out of sync with the real situation in the region.

Remember that after the Covid-19 experience and seven months of national angst over the government’s efforts to shove radical judicial reform down the throats of Israelis, we were savagely attached by Hamas and are now 835 days into the longest war in our history.  Logic would dictate that the result of such upheaval in a normal society would manifest itself in economic ruin and societal fracture.

Yet the Israeli Shekel has shown significant strength recently (late 2025/early 2026), reaching multi-year highs against the US$ (around NIS 3.17-3.24) due to factors such as strong high-tech investment, reduced geopolitical risk perception, high economic growth, and a weak global dollar, benefiting from portfolio flows and service exports, though posing challenges for exporters. This strength reflects improved economic fundamentals but also prompts discussion about potential central bank intervention to curb appreciation.

The flourishing of the Israeli Shekel, is something that would not have been possible to imagine in 1984 when I cam here, when the annual inflation rate was approaching 1,200% and the exchange rate to the dollar changed twice daily.

Further, a recent report by the IVC Research Center on the state of the economy at the end of 2025, showed a simply amazing rebound from the early days of the current war with Hamas when pundits were concerned about the strength of Israel’s financial sector.

They report:

• Israeli tech market financial activity continued to expand in 2025, with high capital profits in capital raising ad exit proceeds.
• Israeli tech companies raised $11 billion across 428 deals in 2025, a 14% increase over 2024 and a 58% increase over 2023.
• Israeli tech exits totaled $17.78 billion across 182 transactions in 2025. If several pending M&As such as Wiz and CyberArk are included, the total reaches a record $88 billion.
• The number of seed rounds doubled in 2025. A-rounds have migrated to the higher end of the deal size range (i.e. over $20m).
• Cyber security remains the dominant vertical in the local ecosystem, both in capital raising and exits.

In addition, Israel’s real estate market has also seen mushrooming growth, characterized by historically high property prices, significant investor interest (especially foreign), and a durable demand despite regional conflicts, with hotspots in Tel Aviv, Jerusalem, and luxury areas, alongside high rents, growing new inventory, and unique land lease structures.

For example, it is virtually impossible to buy a 2-bedroom apartment in Jerusalem today for under $1.1 million, remembering that apartments here are sold “bare.”  That is, no appliances, no closets, no built-ins of any kind necessitating a further investment to make the apartment livable within normal expectations.

All of this in a country the remains in conflict with Hamas in Gaza (in spite of the US-brokered cease fire), the continuation of sorties into Southern Lebanon to root out Hezbollah terror cells (in spite of the cease fire agreement signed in November 2024), skirmishes with anti-Israel forces in Syria (while we negotiate some kind of operational peace agreement with the new government) and a consistent threat of some kind of military action against Israel emanating from Iran.

We would like to believe that this is all the result of good management of the various aspects of the country by the government in power.  But, most likely, there is another element at play here as well, the benevolence of a higher power making sure that we will be secure in the land promised to us 3,500 years ago.  Even the most secular among us would be hard pressed to deny the miracles we have seen over the last few years.  Say what you will, but when secular kibbutzim like Nir Oz, which was almost eliminated on October 7^th, decide to build a synagogue, well, dear readers you can draw your own conclusions.

David’s words in Psalm 121:4 that “The God of Israel neither slumbers nor sleeps” is a powerful phrase emphasizing God’s constant, vigilant watch over us, assuring those of us who live here of unending protection and care.  Our God is always active and never tires as our keeper and guardian. May that continue to be the case until eternity.