Understanding Israeli Currency: All About the Shekel

The money in Israel is called the New Israeli Shekel (NIS). Its symbol is ₪, and its currency code is ILS. It’s divided into 100 agorot (singular: agora).

Diving Deeper into the Shekel: A Currency with a Rich History

The New Israeli Shekel isn’t just a means of exchange; it’s a symbol of Israeli economic independence and a testament to the nation’s resilience. It represents the culmination of several currency reforms and adjustments designed to stabilize the economy and reflect the country’s evolving financial landscape. Understanding the Shekel’s nuances involves looking at its historical context, its present-day performance, and its role in the global financial system. It’s more than just money; it’s a piece of Israel’s story.

From Lira to Shekel: A History in Brief

Israel’s currency journey is a fascinating one. Before the establishment of the State of Israel, the region primarily used the Palestinian pound (also called the lira) under the British Mandate. Following independence in 1948, Israel initially adopted the Israeli lira, which was pegged to the British pound. However, the lira suffered from high inflation and devaluations.

In 1980, the old shekel was introduced to replace the lira at a rate of 1 old shekel to 10 lira. Unfortunately, the old shekel also faced significant inflationary pressures. This ultimately led to the introduction of the New Israeli Shekel (NIS) in 1985. The transition rate was 1,000 old shekels to 1 new shekel. This move, part of a broader economic stabilization plan, proved highly successful in curbing inflation and establishing a stable currency.

Current Shekel Denominations: Coins and Banknotes

Today, the New Israeli Shekel consists of both coins and banknotes. The coins are available in the following denominations:

• 10 agorot
• ½ Shekel
• 1 Shekel
• 2 Shekels
• 5 Shekels
• 10 Shekels

The banknotes come in the following denominations:

• 20 Shekels (red)
• 50 Shekels (green)
• 100 Shekels (orange)
• 200 Shekels (blue)

Each banknote features a prominent Israeli poet or writer, a testament to the nation’s rich cultural heritage. The designs are modern and incorporate advanced security features to prevent counterfeiting.

The Shekel in the Global Market

The New Israeli Shekel is a fully convertible currency, meaning it can be freely bought and sold on the international foreign exchange market. Its value fluctuates based on a variety of factors, including:

• Interest rates set by the Bank of Israel
• Israel’s economic performance (GDP growth, inflation, unemployment)
• Geopolitical events and regional stability
• Global market sentiment

While not a major reserve currency like the US dollar or the Euro, the Shekel is an important regional currency and is closely watched by investors interested in the Middle East. Its relative stability in recent years has made it an attractive option for some international transactions and investments.

FAQs About the Israeli Shekel

Here are some frequently asked questions related to the Israeli Shekel, providing essential information for travelers, investors, and anyone interested in learning more about this important currency:

1. Where can I exchange my currency for Shekels?

You can exchange currency for Shekels at banks, currency exchange bureaus, and at Ben Gurion Airport upon arrival. Banks generally offer more competitive exchange rates, but exchange bureaus may be more convenient.

2. Is it better to exchange currency before I arrive in Israel?

It’s generally advisable to exchange a small amount of currency before arriving in Israel to cover immediate expenses like transportation from the airport. However, larger amounts are usually better exchanged within Israel for more favorable rates.

3. Are credit cards widely accepted in Israel?

Yes, credit cards are widely accepted in Israel, especially in major cities and tourist areas. Visa and Mastercard are the most commonly accepted cards. American Express is accepted at many places, but it is less common.

4. Are ATMs readily available in Israel?

ATMs are readily available throughout Israel, particularly in urban areas and tourist locations. Most ATMs accept international cards. Be sure to check with your bank about international transaction fees.

5. What is the current exchange rate between the Shekel and the US Dollar?

The exchange rate between the Shekel and the US Dollar fluctuates constantly. You can find the most up-to-date information on financial websites, such as Google Finance, Bloomberg, or XE.com.

6. How much should I tip in Israel?

Tipping is customary in Israel. In restaurants, a tip of 10-15% is generally expected for good service. It’s also common to tip taxi drivers, hotel staff, and tour guides.

7. What is the cost of living like in Israel compared to the US or Europe?

The cost of living in Israel, especially in cities like Tel Aviv and Jerusalem, is generally comparable to major cities in the US and Europe. Some items, like housing, can be quite expensive, while others, such as certain locally produced goods, may be more affordable.

8. Is it safe to use cash in Israel?

Using cash in Israel is generally safe, but as with any country, it’s always wise to be cautious and avoid displaying large sums of money in public. Using a mix of cash and credit cards is usually the best approach.

9. How has the Shekel performed against other currencies in recent years?

The Shekel has generally performed well against other major currencies in recent years, reflecting Israel’s relatively strong economy and sound monetary policy. However, fluctuations do occur based on global economic conditions and geopolitical events.

10. What is the role of the Bank of Israel?

The Bank of Israel is the central bank of Israel. Its main functions include:

• Setting monetary policy (interest rates)
• Managing the country’s foreign exchange reserves
• Supervising the banking system
• Issuing banknotes and coins

The Bank of Israel plays a crucial role in maintaining price stability and promoting economic growth.

11. What are some unique aspects of the Israeli economy that affect the Shekel?

Several factors uniquely shape the Israeli economy and influence the Shekel’s value, including:

• Israel’s strong technology sector (the “Start-Up Nation”)
• Geopolitical risks and regional instability
• Significant foreign direct investment
• Relatively high levels of income inequality

These factors contribute to both the strength and the volatility of the Israeli economy.

12. Where can I find more information about the New Israeli Shekel?

You can find more information about the New Israeli Shekel on the following websites:

• Bank of Israel: https://www.boi.org.il/en/
• Financial news websites (Bloomberg, Reuters, etc.)
• Currency conversion websites (XE.com, etc.)

By understanding the intricacies of the New Israeli Shekel, you gain a deeper appreciation of Israel’s economy, its history, and its place in the global financial system. It’s a currency that reflects the nation’s dynamism and its enduring spirit.