There are, I believe, many advantages to a flexible exchange rate regime. It avoids the problem of choosing the right level at which to fix the exchange rate.
They sell foreign currency, in the spot and future markets, that they get either from their export receipts, or from foreign currency loans, or from drawing on their foreign currency deposits in Israel or abroad. It seems clear that Israelis who sell foreign currency have more faith in the stability of the shekel than their foreign counterparts.