• Home Page
• Communication and Publications
• Press Releases
• The annual report on the investment of Israel's foreign exchange reserves for 2025 was published today

Press Releases

Back

The annual report on the investment of Israel's foreign exchange reserves for 2025 was published today

Report on the Investment of Israel's Foreign Exchange Reserves in 2025 31/03/2026 Share: To view this press release as a word file, click here

To view this press release as a pdf file, click her

| Economic and financial background conditions | During 2025, the positive trend in most equity and bond markets continued, in view of the continued growth worldwide and positive developments in the AI field.  In the US, the inflation level remained high, making it difficult for the Federal Reserve to significantly lower the interest rate.  In Europe, fiscal and geopolitical risks led to increased yields on government debt. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Level of the foreign exchange reserves and sources of their change | In 2025, Israel’s foreign exchange reserves increased by about $14.9 billion to $229.5 billion.  This increase was due to capital gains on equity holdings, interest income from bond holdings, and exchange rate differentials in respect of the weakening of the US dollar against the benchmark currencies.  These profits were partly offset by government withdrawals from its foreign currency account managed at the Bank of Israel. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Asset allocation of the foreign exchange reserves | As of the end of 2025, the asset allocation of the foreign exchange reserves was 65 percent in government and other bonds [1], 25 percent in equities, and 10 percent in corporate bonds. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on the reserves portfolio in terms of the currency benchmark | The rate of return on the reserves portfolio in terms of the currency benchmark [2] was 7.9% in 2025.

| Table 1.1 \| Rate of Return on the Foreign Exchange Reserves Portfolio, Annual and Multiyear Average, in Terms of the Currency Benchmark | | | |
| Percent in annual terms | | | |
| | 1-Year | 3-Year | 5-Year |
| 2021 | 2.9% | 4.4% | 3.2% |
| 2022 | -5.7% | 0.3% | 1.4% |
| 2023 | 8.2% | 1.6% | 3.0% |
| 2024 | 6.7% | 2.9% | 3.1% |
| 2025 | 7.9% | 7.6% | 3.9% |
| | | | | | Table 1.1 | Rate of Return on the Foreign Exchange Reserves Portfolio, Annual and Multiyear Average, in Terms of the Currency Benchmark | | | | Percent in annual terms | | | | | 1-Year | 3-Year | 5-Year | 2021 | 2.9% | 4.4% | 3.2% | 2022 | -5.7% | 0.3% | 1.4% | 2023 | 8.2% | 1.6% | 3.0% | 2024 | 6.7% | 2.9% | 3.1% | 2025 | 7.9% | 7.6% | 3.9% | | | | | | | | | | | | | | | | | | | | | | |
| Table 1.1 | Rate of Return on the Foreign Exchange Reserves Portfolio, Annual and Multiyear Average, in Terms of the Currency Benchmark | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Percent in annual terms | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 1-Year | 3-Year | 5-Year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 | 2.9% | 4.4% | 3.2% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | -5.7% | 0.3% | 1.4% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | 8.2% | 1.6% | 3.0% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | 6.7% | 2.9% | 3.1% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2025 | 7.9% | 7.6% | 3.9% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk level of the reserves portfolio | The volatility of the reserves moderated slightly, influenced by the decline in volatility in the equity and bond markets.  However, due to the increase in the weight of equities in the portfolio during the year, the tail risk (CVaR5% [3]) increased. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on the reserves portfolio in shekel terms | The rate of return on the foreign exchange reserves portfolio in shekel terms was -2.5% in 2025, due to the strengthening of the shekel against the currency benchmark by 9.6%.  However, in the 3-year and 5-year ranges, there was a positive shekel rate of return.  In accordance with one of the investment policy goals for the reserves, the shekel rate of return must cover the shekel cost of holding the reserves in the long term. [4]

| Table 1.2 \| Yield on Holding Foreign Currency Reserves, Annual Perspective and Multiyear Average, in Shekel Terms | | | | |
| Percent in annual terms | | | | |
| | Annual change in the currency benchmark/shekel exchange rate* | Yield | | |
| | 1-Year | 3-Year | 5-Year | |
| 2021 | -5.7% | -2.9% | -2.0% | -0.6% |
| 2022 | 9.7% | 3.4% | 0.0% | 0.7% |
| 2023 | 3.8% | 12.4% | 4.1% | 1.8% |
| 2024 | -1.8% | 4.8% | 6.8% | 3.3% |
| 2025 | -9.6% | -2.5% | 4.7% | 2.9% |
| * A negative sign means appreciation of the shekel. | | | | |
| | | | | | | Table 1.2 | Yield on Holding Foreign Currency Reserves, Annual Perspective and Multiyear Average, in Shekel Terms | | | | | Percent in annual terms | | | | | | Annual change in the currency benchmark/shekel exchange rate* | Yield | | | | 1-Year | 3-Year | 5-Year | 2021 | -5.7% | -2.9% | -2.0% | -0.6% | 2022 | 9.7% | 3.4% | 0.0% | 0.7% | 2023 | 3.8% | 12.4% | 4.1% | 1.8% | 2024 | -1.8% | 4.8% | 6.8% | 3.3% | 2025 | -9.6% | -2.5% | 4.7% | 2.9% | * A negative sign means appreciation of the shekel. | | | | | | | | | |
| Table 1.2 | Yield on Holding Foreign Currency Reserves, Annual Perspective and Multiyear Average, in Shekel Terms | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Percent in annual terms | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Annual change in the currency benchmark/shekel exchange rate* | Yield | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 1-Year | 3-Year | 5-Year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 | -5.7% | -2.9% | -2.0% | -0.6% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | 9.7% | 3.4% | 0.0% | 0.7% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | 3.8% | 12.4% | 4.1% | 1.8% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | -1.8% | 4.8% | 6.8% | 3.3% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2025 | -9.6% | -2.5% | 4.7% | 2.9% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| * A negative sign means appreciation of the shekel. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Changes in the guidelines | At the end of 2025, changes in the guidelines came into effect.  These changes were formulated by the Monetary Committee in consultation with the Minister of Finance.  The aim of the changes is to tighten the safety and liquidity constraints, alongside a moderate expansion of the risk budget in CVaR5% terms, and expansion of the degree of freedom to invest in risk assets. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

[1] Including deposits and current accounts in central banks where the risk level is equal to the sovereign risk inherent in government bonds, investment in debt instruments of multinational issuers and of public sector issuers or issuers with government backing (supra-sovereign agencies), as well as government bonds denominated in a currency that is different from the local currency of the issuing country.

[2] Information on the currency benchmark appears below in Chapter 2.

[3] The definition of the risk indices is included in the glossary of terms in Appendix 3.

[4] The cost of holding the reserves has averaged 3.1% over the last three years and 2% over the last five years. This cost is lower than the Shekel return for the three- and five-year periods, as presented in Table 1B. In the new guidelines (see Box 1), the secondary target of the investment policy is to achieve a shekel rate of return that will reduce the cost of holding the reserves in the long term.

This page was last updated on: 31/03/2026