The currency of Israel is the Israeli new shekel. The Israeli new shekel is coded as ILS, and was formerly known as New Israeli Sheqel (NIS). The Israeli new shekel is symbolized by ₪, which is a combination of the signs of two Hebrew words: shekel and hadash. Besides its use within Israel, the Israeli new shekel is also used as legal tender in Palestinian territories, including the West Bank and the Gaza Strip. The new shekel is subdivided into 100 agora. The body responsible for the issuance of the new shekels is the Bank of Israel. According to Bank of Israel, the inflation rate of the new shekel was -0.2% in 2016.
History of the Shekel
The name “shekel” is derived from an ancient biblical reference to a currency of the same name. The first currency was issued when Israel attained its independence in 1948, and was referred to as the Palestine pound. Later, the name was changed to the Israeli pound in 1952. The Israeli government stopped fixing the value of the Israeli pound to the British pound in January 1954. In the following year, Israel established the Bank of Israel. Subsequently, in 1980, the name of the Israeli currency changed from Israeli pound to the old shekel. The shekel experienced hyperinflation during the 1980s, and as a result, was replaced by the new shekel on January 1, 1986, following various monetary policy adjustments. These conservative and careful monetary and fiscal policies have resulted in Israel’s positive balance of payments. Furthermore, the Israeli new shekel has become stronger against the US dollar. The currency is a fully convertible and can be traded in futures contracts in the foreign exchange market.
The first coins were produced in denominations of ₪1/2 and ₪1, and 1, 5, and 10 agora in 1985. This was followed by the introduction of ₪5, ₪10, and ₪2 coins in 1990, 1995, and 2007 respectively. In 1990, the production of the 1 agora coin stopped, and the 5 agora coin was removed from circulation in 2006.
Israeli new shekel banknotes have been issued in three stages since 1986. Introduction of the first notes was done through a Series A issuance between 1985-1999. In 1985, new shekels of denominations ₪5 ,₪50, and ₪10 were issued. This was followed by the introduction of ₪1 and ₪100 in 1986, ₪20 banknotes in 1988, as well as the ₪200 in 1991. Eventually, banknotes in ₪1, ₪5, and ₪10 denominations were replaced by coins. The Series B note issuance began in 1999, and in 2005, these Series B notes replaced the first series banknotes. Denominations of notes issued at the time were ₪20, ₪50, ₪100, and ₪200. The Series C notes issuance occurred from 2014 to date, and has incorporated the English word for shekel. The Bank of Israel previously used the Hebrew words shaqim and sheqel, not shekel. The new notes also bear portraits of Israeli poets such as Leah Goldberg, Rachel Bluwstein, Nathan Alterman, and Shaul Tchernichovsky. Current denominations of Israeli new shekel banknotes include ₪20, ₪50, ₪100, and ₪200.