What Is a Shekel? From Ancient Weight to Modern Currency
Discover the shekel's transformation from an ancient unit of weight to its current form as a modern nation's currency.
The shekel is a currency with a history stretching back to ancient times, initially serving as a unit of weight before evolving into a medium of exchange. Today, it is the official currency of Israel, playing a central role in the nation’s economy. Its journey from an ancient measurement to a contemporary monetary unit provides insight into its significance.
Historical Evolution
The term “shekel” originated as an ancient unit of weight in the Near East around 3000 B.C., derived from a Hebrew word meaning “to weigh.” This unit was used for weighing various commodities, including precious metals like silver and gold, before the widespread use of coinage. Its weight varied across regions and eras, commonly representing 11 to 12 grams. Early shekels were measured quantities of metal used in transactions, not minted coins.
The shekel reappeared as currency in modern times with Israel’s establishment. The Israeli pound, also known as the lira, was the official currency from 1952 to 1980. A law in the 1960s changed the national currency name to the shekel. The original Israeli Shekel was introduced on February 24, 1980, replacing the Israeli pound at a rate of 1 shekel to 10 Israeli pounds.
This “old shekel” experienced hyperinflation in the early 1980s, leading to its short lifespan. To combat severe inflation and stabilize the economy, the New Israeli Shekel (NIS) was introduced on January 1, 1986. The NIS replaced the old shekel at a conversion rate of 1,000 old shekels to 1 new shekel, effectively removing three zeros.
Current Currency Characteristics
The New Israeli Shekel (NIS), currency code ILS, is the official legal tender in Israel. It is subdivided into 100 units called agorot. The official symbol for the NIS is ₪, combining the first Hebrew letters of “shekel” and “hadash” (meaning new). If the symbol is unavailable, NIS or ILS are commonly used.
Coins are issued in denominations of 10 agorot, one-half shekel (50 agorot), and 1, 2, 5, and 10 shekels. Banknotes are available in denominations of 20, 50, 100, and 200 shekels. Each banknote features distinct colors and imagery, including portraits of prominent poets and micro-printed poems, with specific colors for each denomination:
The 20-shekel note is red.
The 50-shekel note is green.
The 100-shekel note is yellow.
The 200-shekel note is blue.
To deter counterfeiting, banknotes incorporate a range of security features. These include a transparent portrait watermark, perforated numerals visible when held to light, and a windowed security thread. Newer series banknotes also feature color-shifting elements, latent images, and an iridescent appearance. They also have different lengths and tactile features to assist visually impaired individuals in distinguishing denominations.
Determining its Exchange Value
The shekel’s value is determined by market forces and fluctuates against other major currencies. This value is influenced by economic factors, including inflation rates, interest rates, and the country’s trade balance. For example, a rise in interest rates can strengthen the shekel, while increased inflation may weaken it. Geopolitical events and market sentiment also play a significant role in the shekel’s exchange rate.
The Bank of Israel plays a role in maintaining the shekel’s stability. While the shekel operates under a managed floating exchange rate system, allowing its value to be determined by supply and demand, the Bank may intervene in the foreign exchange market to prevent excessive fluctuations. This intervention can involve buying or selling foreign currency to stabilize the shekel. The Bank of Israel also publishes representative exchange rates daily, reflecting market rates.
Individuals can check current exchange rates through online tools, financial websites, or banking applications. When converting currency, it is important to understand the difference between buying and selling rates, as these can vary. For travelers or those engaging in international transactions, exchanging currency at local banks or licensed exchange agencies within the country often provides more favorable rates than airport exchanges or home banks.