Both Israel’s shekel and the Mexican peso will join 15 other convertible currencies now traded in about 80 countries. The decision to let Israel into the elite group was made by the CLS Bank, based in New York and supervised by the US Federal Reserve.
This right of passage for Israel’s shekel – whose name first came into being about 5,000 years ago – gives it a new status among international investors and buyers.
News of its convertibility enhanced a rumor that the shekel was the strongest currency in the world at the start of 2008. A source at Citigroup Israel, speaking on anonymity, confirmed to ISRAEL21c that the rumor was true.
A source at the Bank of Israel was more cautious. Says Michael Strawcznski, the deputy director of the research department at the Bank of Israel: “Whether it’s the strongest currency in the world in 2008, I can’t say for certain. But there is no doubt that the shekel is strong.”
Strawcznski who works directly under Stanley Fischer, Bank of Israel’s head, prefers looking at the long-term. In general, he says, the Israeli shekel is expected to stay strong. This is partly due to the fact that “Israelis have discovered foreign investment abroad,” he says.
The fact that the Israeli currency will appear at banks as a fully convertible currency is a big step for the tiny nation of just under seven million people, which recently introduced a two shekel coin, nicknamed the “schnekel” into the market.
“It is well known that [the fully convertible status] may open some new doors to traders who didn’t know about the shekel,” says Strawcznski, adding that it is “good for tourism in general. People now have the possibility to get the shekel wherever they are.
“In terms of the fiscal policy that we are running today [in Israel], we are in very good shape. We are a center for high-tech and there are a lot of financial possibilities through venture capital,” he adds.
Israel’s convertibility, newspapers report, will not only improve Israel’s status among investors, it will also affect how international credit rating agencies such as Moody’s, Standard and Poor’s, and Fitch rate Israel.
Use of the word “shekel” as a currency has been traced back to Mesopotamia around 3,000 BCE. It is believed to have represented an ancient unit of weights. One explanation is that a “shekel” denoted a specific mass of barley, with the first syllable of the word, ‘she’ meaning barley in the Akkadian language.
Surviving all the way to modern day Hebrew, the word shekel in Israel today means “to weigh.” It is also likely, some sources indicate, that the English word “scale” is derived from “shekel.”