The exchange rate stabilization program in Israel in the mid-1980s aimed to reduce high inflation rates by pegging the shekel to the dollar. However, continued high inflation and capital movements led to the need for exchange rate adjustments. This transition from a fixed to a flexible exchange rate regime took place from 1989 to 1997, reflecting a shift in the exchange rate's role as a price anchor. The increase in exchange rate flexibility was driven by market liberalization and the growth of the high-tech industry, ultimately leading to the adoption of a crawling band exchange rate regime in 1992.