What Is a Shekel Worth? The Value of Israel’s Currency
Gain insight into the Israeli Shekel's fluctuating value, its economic drivers, and practical aspects for users.
The Israeli New Shekel (ILS) serves as the official currency of Israel. Recognized internationally by its currency code ILS and symbol ₪, which combines the first Hebrew letters of “shekel” (ש) and “ẖadash” (ח) for “new,” its value is subject to daily fluctuations. Understanding these dynamics provides insight into the worth of the shekel in the global financial landscape.
Understanding Its Current Value
The value of the Israeli New Shekel is primarily determined by its exchange rate against other major global currencies, such as the US Dollar, Euro, and British Pound. These exchange rates are highly dynamic, changing constantly based on real-time market activity. For individuals seeking the most up-to-date information, reliable sources include online currency converters, financial news websites, and the official website of the Bank of Israel, which publishes daily representative exchange rates. These platforms offer transparent data, allowing users to track the shekel’s performance against their home currency.
When converting currency, it is important to note that the rate offered by a bank or exchange service may differ slightly from the mid-market rate found on financial data sites. This difference often includes a service fee or a spread applied by the institution. Comparing various providers is advised to secure the most favorable exchange rate, especially for larger transactions.
Factors Affecting the Shekel’s Exchange Rate
The exchange rate of the Israeli New Shekel is influenced by a combination of macroeconomic indicators and geopolitical considerations. The Bank of Israel, the country’s central bank, plays a significant role through its monetary policy decisions, particularly the setting of interest rates. Higher interest rates can attract foreign investment, thereby increasing demand for the shekel and strengthening its value. Conversely, a reduction in interest rates might lead to a depreciation of the currency.
Inflation rates also exert an influence on the shekel’s value. When Israel experiences lower inflation compared to its trading partners, the purchasing power of the shekel can increase, leading to its appreciation. Economic growth, measured by Gross Domestic Product (GDP), and the nation’s balance of trade, which reflects the difference between exports and imports, further impact the currency. A trade surplus, indicating more exports than imports, generally suggests a stronger economy and can support the shekel’s value.
Geopolitical stability and foreign investment flows, particularly into Israel’s technology sector, are additional factors that can affect the shekel’s strength. Periods of political uncertainty or regional conflict can lead to volatility and a weakening of the shekel as investors may seek safer assets. However, Israel’s strong tech industry and a consistent inflow of foreign capital contribute to its economic resilience, which can help stabilize the currency even during challenging times.
Practical Aspects of the Shekel
The Israeli New Shekel is subdivided into 100 agorot. Banknotes are currently issued in denominations of 20, 50, 100, and 200 shekels, each featuring distinct colors and security features. For instance, the 20-shekel note is green, the 50-shekel note is purple, the 100-shekel note is orange, and the 200-shekel note is blue, with each denomination displaying a different Hebrew poet.
Coins are available in denominations of 10 agorot, 50 agorot (which is half a shekel), 1 shekel, 2 shekels, 5 shekels, and 10 shekels. While the shekel is primarily circulated within Israel, it is also accepted as a de facto legal tender in Palestinian territories, including the West Bank and Gaza Strip.
Israel’s currency has undergone several transformations. The Israeli Lira was the currency from 1952 until 1980, when it was replaced by the Old Israeli Shekel. Due to hyperinflation, the Old Shekel was short-lived, replaced in 1985 by the current New Israeli Shekel at a rate of 1,000 old shekels to 1 new shekel. This transition marked a significant economic reform aimed at stabilizing the nation’s financial system.