Are Shekels Still Used? A Look at Israel’s Currency
Explore the Israeli New Shekel: understanding its continued use, historical evolution, and current economic significance.
The shekel is the official currency of Israel, formally known as the Israeli New Shekel (ILS). It is widely used throughout Israel as the primary medium of exchange for goods and services.
The Israeli New Shekel Today
The Israeli New Shekel (ILS) is also commonly referred to as NIS. Its symbol is ₪, a combination of the first Hebrew letters for “shekel” and “new” (שקל חדש). The currency is divided into 100 smaller units, known as agorot.
Banknotes are issued in denominations of 20, 50, 100, and 200 shekels. Coins are available in denominations of 10 agorot, ½ shekel (50 agorot), 1 shekel, 2 shekels, 5 shekels, and 10 shekels. The Israeli New Shekel is also used as a de facto legal tender in the Palestinian territories of the West Bank and the Gaza Strip.
Historical Context of the Shekel
The term “shekel” has deep historical roots, initially referring to a unit of weight used for trade in ancient Mesopotamia and the Near East, predating coined money by millennia. This ancient unit of weight varied, but approximated around 11 grams. The word itself derives from a Hebrew verb meaning “to weigh,” reflecting its original use in commerce.
The modern Israeli New Shekel was introduced on January 1, 1986. This marked a financial redenomination, replacing the old Israeli shekel at a rate of 1,000 old shekels to 1 new shekel. The old Israeli shekel was in circulation from 1980 to 1985, following the Israeli pound (1952-1980). This transition aimed to combat hyperinflation experienced in the early 1980s.
Understanding Its Value and Use
The Israeli New Shekel has been a freely convertible currency since January 1, 2003. The Bank of Israel issues and manages the currency, operating under a managed floating exchange rate system. This system allows its value to be influenced by market forces, though the Bank of Israel may intervene to promote stability.
The shekel’s exchange rate against major world currencies, such as the US Dollar and the Euro, fluctuates based on economic indicators and geopolitical factors. While generally stable, external events can impact its value. Visitors to Israel can acquire shekels at banks, licensed exchange bureaus, or ATMs located throughout major cities and tourist areas.
Credit cards, including Visa, Mastercard, and American Express, are widely accepted across Israel for most transactions. Carrying some cash is advisable for smaller purchases, street markets, or in more rural areas. When using ATMs or making purchases, it is recommended to conduct transactions in the local currency (ILS) to avoid unfavorable exchange rates offered by dynamic currency conversion services.