You’ve probably seen the symbol ₪ while scrolling through travel vlogs or checking international exchange rates. It looks a bit like a stylized "u" and "n" tangled together. That’s the sign for the Israeli Shekel. Most people think of it just as the money they’ll need for a trip to Jerusalem or Tel Aviv, but honestly, the shekel has a history that makes the US Dollar look like a newborn baby. It’s one of the few currencies on the planet that has successfully made the jump from a unit of weight in the Bronze Age to a high-tech, floating digital asset in the 21st century.
Money is weird. We give value to pieces of paper because we all agree they’re worth something. But with the shekel, that agreement has lasted for thousands of years, even if the "paper" part is a relatively new invention.
What Is a Shekel Exactly?
Today, the official currency of Israel is the New Israeli Shekel (ILS). It’s also the primary currency used in the Palestinian territories of the West Bank and the Gaza Strip. When you hold a 10-shekel coin in your hand, you’re holding a piece of hardware that represents one of the strongest currencies in the world. Seriously. In the last decade, the shekel has frequently been labeled a "strong" currency by economists because of Israel's massive natural gas reserves and its booming tech sector.
But let’s back up.
The word "shekel" comes from the ancient Semitic root š-q-l, which literally means "to weigh." In the old days—we're talking 3000 BCE in Mesopotamia—a shekel wasn't a coin. It was a specific weight of barley or silver. If you were a merchant in ancient Israel or Babylon, you didn't count your money; you put it on a scale. It took about 180 grains of barley to make one shekel.
Imagine trying to buy a car today with bags of grain. It’d be a nightmare.
The transition from "weight" to "coin" happened much later, around the 7th century BCE. By the time the First Jewish Revolt against Rome happened in 66 CE, the silver shekel became a symbol of sovereignty. Minting your own money was basically the ancient version of posting a "Keep Out" sign to the Roman Empire. When the modern State of Israel was founded in 1948, they actually didn't use the shekel right away. They used the Israeli Pound (Lira). It wasn't until 1980 that they brought back the biblical name to replace the colonial-sounding pound.
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The 1985 Economic Collapse and the "New" Shekel
If you were in Israel in the early 80s, your wallet was a mess. Inflation was absolutely insane. We're talking 400% or more. Prices changed every hour. You’d buy a loaf of bread in the morning, and by dinner, that same loaf cost twice as much. It was a disaster.
To save the economy, the government had to do something drastic. In 1985, they introduced the New Israeli Shekel. They basically chopped three zeros off the old currency. 1,000 old shekels suddenly became 1 New Shekel. This wasn't just a name change; it was a total psychological reset for the country. It worked. Today, the Bank of Israel manages the ILS with a level of stability that many European countries envy.
What do the notes look like?
Israeli banknotes are colorful, vertical, and actually pretty beautiful. They feature poets rather than politicians, which is a bit of a flex.
- 20 Shekel (Red): Features Rachel Bluwstein, known simply as "Rachel the Poetess."
- 50 Shekel (Green): Features Shaul Tchernichovsky.
- 100 Shekel (Orange): Features Leah Goldberg.
- 200 Shekel (Blue): Features Nathan Alterman.
They also have different lengths. The higher the value, the longer the bill. This is a brilliant accessibility feature for the visually impaired, allowing anyone to feel the size of the note and know exactly how much they’re holding.
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The Global Power of the ILS
Why is the shekel so strong? It’s a question forex traders obsess over.
A huge part of it is "Foreign Direct Investment." People want to put their money into Israeli startups. When a giant company like Google or Intel buys an Israeli tech firm for billions of dollars, they usually have to convert a lot of that money into shekels to pay local salaries and taxes. That massive demand drives the value up.
Also, the "Gas Factor." Since the discovery of the Tamar and Leviathan gas fields in the Mediterranean, Israel has gone from an energy importer to an exporter. Selling gas to neighbors like Egypt and Jordan means a constant flow of foreign currency into the Israeli central bank.
However, a currency being too strong is actually a problem. If the shekel is too expensive, it makes Israeli exports—like microchips or oranges—way too pricey for people in the US or Europe to buy. The Bank of Israel often has to step in and sell shekels to keep the value from skyrocketing. It's a delicate balancing act that affects everything from the price of a falafel in Jerusalem to the cost of a cybersecurity subscription in New York.
Misconceptions About the Shekel
People often get confused about where you can use it. Yes, it’s the legal tender of Israel. But it’s also the de facto currency of the Palestinian Authority. While the Jordanian Dinar and the US Dollar are often used for big transactions like buying a house or a car in Ramallah, the daily "coffee and bread" economy runs almost entirely on shekels.
Another common myth is that the shekel is "pegged" to the dollar. It isn't. It’s a free-floating currency. Its value is determined by the global market. Back in the day, it was tied to a "basket" of currencies, but now it’s out in the wild, holding its own against the big players.
How to Handle Shekels Like a Local
If you're heading to the region, don't overthink the exchange.
- Skip the Airport Kiosks: Their rates are usually terrible. Wait until you get into the city.
- Use the ATM: Most Israeli ATMs (especially those belonging to big banks like Hapoalim or Leumi) will give you a fair market rate.
- Check the "Change" Spots: In places like Tel Aviv or Jerusalem, small licensed currency exchange booths often have better rates than the banks and charge zero commission.
- Tipping Culture: Tipping is standard in restaurants (usually 10-15%). You can’t always add a tip to a credit card bill, so always keep some 5 and 10-shekel coins on you.
The 10-shekel coin is particularly cool. It’s bimetallic—meaning it has a gold-colored center and a silver-colored outer ring. It’s heavy, feels valuable, and features an ancient palm tree motif. It’s a tiny bridge between a Bronze Age weight and a modern digital economy.
Real-World Value
As of early 2026, the exchange rate usually hovers somewhere between 3.5 to 3.8 shekels to 1 US Dollar. But that changes daily. If you're doing business or planning a long-term stay, you need to watch the "Bank of Israel" announcements. They are the ultimate authority on the currency's health.
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The shekel isn't just money. It’s a survival story. It survived the Roman conquest, thousands of years of exile, 400% hyperinflation, and the transition into a digital-first world. Whether you're weighing barley in a dusty market or trading tech stocks on the TASE (Tel Aviv Stock Exchange), the shekel remains the heartbeat of the region's economy.
Actionable Next Steps
- Check the Current Rate: Use a reliable site like XE.com or the official Bank of Israel portal to see where the shekel stands against your local currency before traveling or investing.
- Update Your Travel Wallet: If you have old shekel notes from before 2014, be aware that the "Series C" (the poets) is the current legal tender. Older notes may need to be exchanged at a bank.
- Investigate Forex Trends: For business owners, look into "shekel hedging" if you have significant expenses or income in ILS, as the currency's volatility against the Euro and Dollar can impact your bottom line.