Table of Contents
- Executive Summary: Key Currency Trends in Palestine
- Historical Exchange Rate Movements: 2015–2024
- 2025 Rate Forecasts: Shekel, Dinar, and Dollar in Palestine
- Key Drivers: Political, Economic, and Regional Influences
- Legal and Tax Implications for Cross-Border Transactions
- Central Bank & Regulatory Policies: Official Guidance
- Compliance Requirements for Businesses and Individuals
- Statistical Outlook: Projections & Data-Driven Scenarios
- Risks, Opportunities, and Strategic Recommendations
- 2026–2030 Long-Term Currency Rate Outlook for Palestine
- Sources & References
Executive Summary: Key Currency Trends in Palestine
The currency landscape in Palestine is distinguished by its atypical reliance on multiple foreign currencies—primarily the Israeli new shekel (ILS), the US dollar (USD), and the Jordanian dinar (JOD)—due to the absence of a national currency. This unique situation is shaped by historical agreements and the ongoing political and economic context. As of early 2025, the Palestinian Monetary Authority (PMA) continues to monitor and regulate currency circulation, aiming to safeguard monetary stability and support economic resilience in the face of significant external dependencies.
Recent years have witnessed heightened sensitivity of exchange rates to regional geopolitical events, cross-border trade restrictions, and global economic shifts. The ongoing conflict dynamics, particularly with Israel, have led to pronounced volatility in the shekel’s value, directly impacting prices and liquidity in the Palestinian territories. Meanwhile, fluctuations in the US dollar, driven by global monetary policy shifts, also reverberate through the Palestinian economy, influencing import costs and inflation rates. In 2024, inflation in Palestine hovered around 3.5%, with exchange rate movements cited as a key contributing factor (Palestinian Monetary Authority).
From a legal and compliance perspective, Palestine operates under the framework established by the 1994 Paris Protocol, which cemented the use of the shekel while permitting the circulation of other currencies. The PMA enforces anti-money laundering (AML) and counter-terrorist financing (CTF) regulations in alignment with international standards to maintain financial sector integrity and facilitate cross-border transactions (Palestinian Monetary Authority).
Key statistics as of Q1 2025 indicate that the ILS accounts for over 60% of total deposits and economic transactions, with the USD and JOD comprising the remainder (Palestinian Monetary Authority). The PMA continues to strengthen its regulatory framework and digital infrastructure to enhance resilience against currency shocks and to lay groundwork for potential e-currency solutions in the future.
Looking ahead, the outlook for currency rates in Palestine remains closely tied to regional stability, Israeli monetary policy, and global economic trends. The PMA’s 2025–2027 strategy underscores efforts to diversify financial instruments and explore digital currency initiatives, though any move toward a sovereign currency remains constrained by prevailing political realities. Currency rate predictions for the next few years expect persistent volatility, with incremental improvements in risk management and regulatory oversight supporting gradual economic stabilization (Palestinian Monetary Authority).
Historical Exchange Rate Movements: 2015–2024
Between 2015 and 2024, currency exchange rates in Palestine have been shaped by a unique combination of political, legal, and economic factors. Palestine does not have its own sovereign currency; instead, three main currencies circulate: the Israeli New Shekel (ILS), the Jordanian Dinar (JOD), and the US Dollar (USD) Palestine Monetary Authority. Given the lack of a national currency and the geopolitical context, exchange rates in Palestine are largely determined by external monetary policies, regional stability, and compliance with international financial regulations.
The New Shekel dominates in the West Bank and Gaza Strip for most retail transactions and public sector salaries. The Jordanian Dinar is preferred for larger transactions and savings, while the US Dollar is used for international trade and contracts. Fluctuations in these exchange rates have often mirrored global developments: for example, the ILS/USD rate shifted from roughly 3.8 in 2015 to between 3.1 and 3.6 during 2020–2023, influenced by both Bank of Israel policy and global economic events such as the COVID-19 pandemic and regional instability Bank of Israel.
Palestinian authorities have limited tools to influence currency rates directly. However, the Palestine Monetary Authority (PMA) plays a key regulatory role in ensuring financial sector stability and compliance with anti-money laundering and counter-terrorism financing laws, in line with recommendations from bodies such as the Financial Action Task Force (FATF). Palestinian legislation, including the Banking Law and Money Changers Law, requires authorized financial institutions to comply with prudential standards, report suspicious transactions, and uphold consumer protection Palestine Monetary Authority.
During 2023 and early 2024, the Palestine Monetary Authority reported persistent liquidity pressures, especially in Gaza, and a reliance on cash due to limited access to formal banking channels. According to quarterly reports, the ILS and JOD remained relatively stable against each other, but USD volatility increased following changes in US interest rates and regional tensions Palestine Monetary Authority. Remittance flows and donor support also played a critical role in maintaining currency liquidity.
Looking ahead to 2025, the interplay between regional stability, international monetary policy, and regulatory compliance will continue to drive currency rate trends in Palestine. The absence of a national currency and ongoing external dependencies suggest continued vulnerability to exchange rate volatility, particularly in the face of global economic uncertainty and evolving regional dynamics.
2025 Rate Forecasts: Shekel, Dinar, and Dollar in Palestine
The currency landscape in Palestine is shaped by the circulation of three major currencies: the Israeli Shekel (ILS), the Jordanian Dinar (JOD), and the US Dollar (USD). As the Palestinian Monetary Authority (PMA) does not issue a sovereign currency, exchange rate dynamics are largely influenced by external monetary policies and regional economic conditions. For 2025 and the coming years, several factors—including regional stability, regulatory updates, and global market trends—will impact rate forecasts.
- Israeli Shekel (ILS): The ILS remains the dominant currency for daily transactions and public sector payments in Palestine. Rate forecasts for 2025 are closely tied to Israel’s economic outlook and monetary policy. With Israel’s central bank expected to navigate post-pandemic inflation and potential geopolitical fluctuations, the shekel’s volatility may persist. The PMA has highlighted the vulnerability of the Palestinian economy to ILS fluctuations due to trade and wage dependencies (Palestinian Monetary Authority).
- Jordanian Dinar (JOD): The JOD is primarily used for large deposits and savings, and its stability is underpinned by Jordan’s fixed exchange rate to the US dollar. Forecasts for 2025 suggest the JOD will maintain relative stability barring significant shocks to Jordan’s foreign reserves or monetary regime. The PMA’s banking supervision frameworks ensure compliance with anti-money laundering and exchange rate policies, further supporting confidence in the JOD (Palestinian Monetary Authority).
- US Dollar (USD): The USD is commonly used in international transactions and as a reserve currency. The Federal Reserve’s interest rate decisions and global dollar liquidity will remain key factors in USD/ILS and USD/JOD rates. Any tightening in US monetary policy could affect dollar inflows and local lending rates in Palestine. The continued use of the USD reflects both market demand and regulatory accommodation by the PMA (Palestinian Monetary Authority).
Statistical indicators from the PMA show the shekel accounted for over 60% of total deposits and loans as of late 2023, with the dollar and dinar comprising the remainder. Looking ahead to 2025, ongoing regional uncertainties, potential reforms in currency management, and compliance with international financial standards will be critical. The PMA’s ongoing efforts to modernize payment systems and strengthen currency risk monitoring are expected to enhance resilience, though external shocks will continue to drive exchange rate variability.
Key Drivers: Political, Economic, and Regional Influences
Currency rate predictions in Palestine for 2025 and the coming years are shaped by a complex interplay of political, economic, and regional factors. Palestine does not issue its own sovereign currency, instead relying on a multi-currency system dominated by the Israeli Shekel (ILS), alongside limited use of the Jordanian Dinar (JOD) and the US Dollar (USD). This unique monetary arrangement makes Palestine particularly sensitive to external political and economic developments.
- Political Factors: The ongoing Israeli-Palestinian conflict and the resulting restrictions on movement, trade, and financial flows continue to create currency volatility. Israeli control over key border crossings and banking clearances directly influences the supply and circulation of both ILS and foreign currencies in Palestinian territories. Political instability, especially in Gaza and parts of the West Bank, intensifies the risk of rapid currency fluctuations and limits the Palestinian Monetary Authority’s (PMA) ability to implement monetary policy or intervene in currency markets (Palestine Monetary Authority).
- Economic Influences: Palestine’s economy is closely integrated with Israel due to the Paris Protocol, which governs economic relations and stipulates the use of the ILS as the main currency for transactions. Key economic indicators, such as GDP growth, unemployment (which stood at 25% in the West Bank and Gaza as of late 2023), and inflation, are closely tied to Israeli economic performance and global commodity prices. The PMA reports persistent trade deficits, dependence on remittances, and foreign aid, all of which influence local currency liquidity and exchange rate stability (Palestine Monetary Authority).
- Regional Dynamics: Fluctuations in the value of the Israeli Shekel—impacted by Israeli monetary policy, regional geopolitical events, and global market shifts—have direct ramifications for Palestine’s currency environment. Periods of heightened regional tension or shifts in donor funding can rapidly affect the flow of foreign currencies, especially the USD and JOD, into Palestinian banks. Instability in neighboring countries, such as Lebanon and Syria, and changes in Jordan’s monetary policy may also exert secondary pressures on currency rates in Palestine (Central Bank of Jordan).
The outlook for currency rates in Palestine through 2025 remains subject to high uncertainty. Without sovereignty over monetary policy or a national currency, Palestine’s exchange rate environment will continue to be shaped by external economic and political developments, as well as the PMA’s regulatory and compliance efforts to maintain financial system stability within these constraints (Palestine Monetary Authority).
Legal and Tax Implications for Cross-Border Transactions
Currency rate volatility remains a significant factor shaping the legal and tax implications for cross-border transactions in Palestine, given the absence of a national currency and the reliance on the Israeli Shekel (ILS), Jordanian Dinar (JOD), and United States Dollar (USD). In 2025, economic and regulatory developments continue to influence currency rate predictions, affecting transaction structuring, risk management, and compliance obligations for businesses and individuals operating across borders.
Recent years have seen increased scrutiny by the Palestine Monetary Authority (PMA) regarding foreign exchange practices and anti-money laundering (AML) requirements. The PMA, which oversees banking activity in the West Bank and Gaza, has introduced enhanced reporting and due diligence standards for multi-currency transactions. This is particularly relevant as the majority of cross-border payments are denominated in USD or JOD, with settlement risks heightened by ongoing geopolitical and economic uncertainty.
Key statistical indicators from the PMA show that in 2023, over 80% of international transfers by value were conducted in USD, while the ILS remains predominant for local retail and public sector transactions. The PMA’s 2024 annual report highlights a moderate depreciation trend for the ILS against the USD, a pattern expected to persist into 2025 due to regional instability, inflationary pressures, and differences in monetary policy between Israel and the United States (Palestine Monetary Authority).
From a legal and tax perspective, currency rate fluctuations directly impact the calculation of taxable profits, VAT obligations, and customs duties for importers and exporters. The Palestinian tax authorities require that all tax filings be denominated in ILS, but allow for conversion from USD or JOD at the official exchange rates published periodically by the PMA (Palestinian Ministry of Finance). Sudden shifts in exchange rates can generate taxable gains or losses, necessitating robust documentation and timely compliance with transfer pricing and foreign exchange regulations.
Looking ahead, the outlook for currency rate stability in Palestine through 2025 and beyond remains cautious. The PMA is exploring digital currency pilots and enhanced settlement infrastructure to mitigate cross-border risks, but broader adoption will depend on regional political developments and coordination with neighboring monetary authorities. Businesses are advised to implement dynamic hedging strategies, closely monitor regulatory updates, and maintain proactive engagement with the PMA and tax authorities to ensure compliance and minimize exposure to adverse currency movements.
Central Bank & Regulatory Policies: Official Guidance
Currency rate predictions in Palestine for 2025 are shaped by the territory’s unique monetary environment, regulatory framework, and dependence on foreign currencies. The Palestinian Monetary Authority (PMA) functions as a de facto central bank, but the Palestinian Authority (PA) does not issue a national currency. Instead, the New Israeli Shekel (NIS), Jordanian Dinar (JOD), and US Dollar (USD) are all in circulation, each governed by their respective issuing authorities. This multi-currency system restricts the PMA’s ability to control exchange rates and implement traditional monetary policy tools.
In recent years, the PMA has focused on enhancing financial sector stability and compliance with international standards. Its regulatory policies emphasize anti-money laundering (AML) and counter-terrorist financing (CTF) compliance, in alignment with the Financial Action Task Force (FATF) recommendations. Currency inflows and outflows are monitored under updated legislation, including the Law on Combating Money Laundering and Terrorism Financing (2021), which strengthens oversight of cross-border currency movements and reporting obligations for financial institutions. The PMA regularly issues circulars and guidance to banks regarding foreign exchange operations and compliance requirements (Palestine Monetary Authority).
Key statistics from the PMA indicate that in 2023–2024, the NIS continued to dominate transactions (more than 80% of payment operations), with the JOD and USD together accounting for the remainder. Fluctuations in the NIS/USD rate—driven by regional tensions, Israeli monetary policy, and global economic developments—directly affect the Palestinian economy. The PMA closely monitors these rates and provides periodic economic forecasts; however, it does not directly intervene in currency markets or publish official exchange rate predictions, reflecting its limited monetary sovereignty (Palestine Monetary Authority).
Looking ahead to 2025 and beyond, the PMA’s official guidance cautions financial institutions and the public to manage foreign exchange risk prudently. Regulatory priorities include expanding digital payments, ensuring robust AML/CTF controls, and advocating for greater currency stability and access to Israeli bank services. The outlook for currency rates in Palestine will remain closely tied to external monetary policies—especially those of the Bank of Israel and the US Federal Reserve—as well as to geopolitical developments and compliance with evolving international standards. The PMA continues to engage with international bodies, seeking to strengthen its regulatory regime and promote financial sector resilience in an environment where direct monetary policy tools remain limited (Palestine Monetary Authority).
Compliance Requirements for Businesses and Individuals
Currency rate predictions in Palestine are subject to a unique set of compliance requirements, shaped by the region’s political status, economic structure, and legal frameworks governing foreign exchange. Since Palestine does not issue its own sovereign currency, the Israeli Shekel (ILS), Jordanian Dinar (JOD), and U.S. Dollar (USD) are the primary currencies in circulation. This multi-currency environment necessitates close regulatory oversight to ensure financial stability, transparency, and adherence to anti-money laundering (AML) standards.
The Palestine Monetary Authority (PMA), functioning as the de facto central bank, sets the principal compliance guidelines for currency exchange and cross-border transactions. All licensed financial institutions and currency exchange businesses must comply with PMA regulations, including regular reporting of exchange rate operations and maintaining records of foreign exchange transactions. The PMA enforces compliance with AML and counter-terrorism financing (CTF) obligations, in line with recommendations from the Financial Action Task Force (FATF) and local law.
- Exchange Controls: The PMA periodically issues directives on permissible currency dealings, mandatory reserve requirements, and documentation for large-value transactions. As of 2025, all institutions are required to adhere to updated reporting formats and must submit real-time data on currency movements to the PMA’s centralized monitoring systems (Palestine Monetary Authority).
- Licensing and Supervision: Individuals and businesses engaging in currency trading or predictions must hold valid licenses from the PMA. Unauthorized operations are subject to administrative penalties or criminal sanctions under the applicable regulatory framework (Palestine Monetary Authority).
- Taxation and Reporting: Currency trading profits by businesses and individuals are subject to income tax under the oversight of the Palestinian Ministry of Finance. Accurate reporting of currency gains and compliance with tax withholding obligations are mandatory.
- Consumer Protection: The PMA requires transparent disclosure of exchange rates, fees, and risks associated with currency transactions. Violations of transparency standards may result in fines or the suspension of operating licenses (Palestine Monetary Authority).
Looking to 2025 and beyond, compliance will likely tighten further as regional instability, global economic shifts, and evolving AML/CTF frameworks prompt more robust oversight. The PMA is expected to enhance digital monitoring tools and increase coordination with international regulatory bodies to counter emerging risks in currency rate speculation and cross-border flows.
Statistical Outlook: Projections & Data-Driven Scenarios
Currency rate predictions in Palestine for 2025 are shaped by the region’s unique monetary framework, ongoing economic pressures, and the absence of a sovereign national currency. The Palestinian economy remains largely reliant on the Israeli shekel (ILS), alongside limited circulation of the Jordanian dinar (JOD) and U.S. dollar (USD), as stipulated by the Paris Economic Protocol governing economic relations between the Palestinian Authority and Israel. This arrangement limits the Palestine Monetary Authority (PMA) from direct interventions or independent monetary policy, resulting in currency rate projections that are significantly influenced by external macroeconomic and geopolitical factors.
Key statistical indicators in 2024 and early 2025 point to continued ILS dominance in domestic transactions, with approximately 90% of retail and salary payments conducted in shekels according to Palestine Monetary Authority data. The exchange rates of the JOD and USD in the West Bank and Gaza are thus closely tied to the ILS’s performance against global benchmarks, especially given the Israeli central bank’s monetary policy and regional stability.
Recent events, such as escalated regional tensions and restrictions on the movement of goods and capital, have heightened exchange rate volatility. The PMA’s 2025 strategic outlook, as stated in its latest annual report, anticipates moderate inflation and continued pressure on purchasing power, with the shekel’s performance hinging on Israeli economic conditions and global trends (Palestine Monetary Authority).
- ILS/USD: Projections for 2025 expect the shekel to remain within a broad band of 3.5–3.8 per USD, factoring in potential Bank of Israel interventions and regional developments (Bank of Israel).
- ILS/JOD: The Jordanian dinar is typically pegged at a fixed rate to the USD, providing stability in its conversion with the ILS, barring significant external shocks (Central Bank of Jordan).
- Compliance & Risk: Palestinian financial institutions must adhere to anti-money laundering and currency reporting obligations under PMA guidelines, with compliance reviews intensified amid currency fluctuations (Palestine Monetary Authority).
Looking ahead to 2025 and beyond, currency rate predictions in Palestine will remain subject to regional geopolitical dynamics, monetary policy decisions by neighboring central banks, and structural economic challenges. The lack of a national currency will continue to constrain policy flexibility, making robust compliance, careful risk monitoring, and close coordination with regional authorities essential for financial stability.
Risks, Opportunities, and Strategic Recommendations
The Palestinian economy remains highly exposed to currency fluctuations, primarily due to the absence of a national currency and heavy reliance on the Israeli Shekel (ILS), alongside the US Dollar (USD) and Jordanian Dinar (JOD). In 2025, risks associated with currency rate predictions in Palestine are amplified by ongoing geopolitical instability, restricted monetary policy autonomy, and external shocks impacting key trading partners.
- Risks: The primary risk is the volatility of the Israeli Shekel, influenced by factors such as changes in Israeli monetary policy, inflation, and regional security events. As Palestine’s imports and public sector wages are largely denominated in ILS, any depreciation directly raises costs and inflationary pressures. Furthermore, regulatory restrictions on cross-border payments and the movement of cash increase liquidity risk and complicate currency management, as detailed by the Palestine Monetary Authority. International remittance inflows—vital for household consumption—are also vulnerable to exchange rate swings and compliance requirements under anti-money laundering laws.
- Opportunities: On the positive side, continued efforts by the Palestine Monetary Authority to enhance payment systems and promote digital financial services may reduce transaction costs and improve access to alternative currencies. Strategic adoption of multicurrency accounting and prudent hedging instruments can partially mitigate foreign exchange exposure for businesses. Moreover, regulatory initiatives to improve transparency and compliance—especially those aligning with international standards as outlined by the Palestine Monetary Authority—could foster greater confidence among investors and remittance providers.
- Strategic Recommendations: For public and private sector actors, a proactive approach is advised. This includes regular scenario analysis to assess the impact of ILS volatility, diversification of currency holdings where feasible, and leveraging digital payment channels that offer multicurrency flexibility. Firms should closely monitor evolving guidance from the Palestine Monetary Authority and ensure robust compliance with anti-money laundering and foreign exchange regulations. Collaboration with regional financial institutions and exploration of currency swap arrangements may also provide additional buffers against future shocks.
Looking ahead, the outlook for currency rate stability in Palestine through 2025 and the subsequent years remains uncertain, given external dependencies and the lack of sovereign monetary tools. However, incremental regulatory reforms, technological investments in financial infrastructure, and enhanced risk management practices can help contain vulnerabilities and position Palestinian businesses to better navigate currency fluctuations.
2026–2030 Long-Term Currency Rate Outlook for Palestine
The long-term outlook for currency rates in Palestine from 2026 to 2030 is shaped by regional geopolitical influences, economic policy developments, and the absence of a sovereign currency. Currently, Palestine relies on the Israeli shekel (ILS), the Jordanian dinar (JOD), and the US dollar (USD) for most transactions, as outlined by the Palestine Monetary Authority (PMA). This multi-currency system constrains monetary policy autonomy and exposes Palestine to exogenous shocks, particularly from Israel and the broader international market.
No formal plans to introduce a Palestinian sovereign currency have been enacted into law as of 2025, although feasibility studies continue under the auspices of the PMA. The PMA's regulatory framework emphasizes financial sector stability and compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) standards, which aligns with the requirements of the Financial Action Task Force (FATF). The Palestinian financial system has adopted several reforms to enhance banking sector resilience and compliance, aiming to facilitate international transactions and boost investor confidence.
Key statistics highlight that over 95% of Palestinian domestic transactions are conducted in shekels, while the dinar and dollar are mainly used for savings and larger transactions, such as real estate and imports (Palestine Monetary Authority). Currency exchange rates in Palestine remain strongly correlated with Israeli monetary policy decisions, such as interest rate adjustments by the Bank of Israel. Any significant shifts—such as inflationary pressures, regional instability, or changes in Israeli-Jordanian monetary policy—directly affect currency values in Palestine.
Looking toward 2026–2030, the PMA projects moderate economic growth, conditional on improved movement and access, donor inflows, and easing of restrictions (Palestine Monetary Authority). Currency rate fluctuations are expected to mirror those of the shekel and, to a lesser extent, the dinar and dollar, unless there are substantial changes in political arrangements or the establishment of a new Palestinian currency. Ongoing legal reforms and compliance upgrades are likely to enhance the resilience of the financial sector but are unlikely to alter the fundamental dependency on external monetary policies in the medium term.
- No sovereign currency planned through 2030; continued reliance on ILS, JOD, and USD.
- Currency rates will track Israeli and Jordanian central bank policies, barring major political changes.
- Financial sector reforms and compliance improvements may gradually improve transaction efficiency and stability but will not eliminate external risks.
