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13 APR 2024

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  • Brett Surbey

What Currency Is In Use In Gaza, and Why Is It Surprising?


Making sense of Gaza’s medium of exchange


israel shekel on the beach

Concurrent with its tumultuous history, Palestine’s accepted currency—both national and not—has changed hands multiple times in the past century. Prior to the First World War, Gaza was under the control of the Ottoman Empire, which circulated the Ottoman Lira. After the British Army took control of Jerusalem in 1917, the Anglo-Egyption Pound was made the only viable currency.


Though the national currency of Palestinian Pounds was used from 1927 to 1950, it would ultimately (and perhaps surprisingly to many) be replaced by the Israeli Shekel after Israel’s takeover of the Gaza Strip in 1967.



  • Palestine, which is not a recognized member state of the United Nations, does not have a national currency.


 

What Currency Does Gaza Use Now?


Transactions in Gaza are typically carried out using the Israeli Shekel, Euro, US Dollar, and Jordanian Dinar. That said, the Israeli Shekel is used for most commercial transactions—especially in retail environments such as shops or restaurants. Though one can pay for items using the other accepted currencies, note that change will most likely be given in shekels—not in the currency paid with.


The lack of a recognized currency, along with a pervasive mistrust of banks, have led to some interesting situations: 


The Jerusalem Post reported that a Gazan dentist created lightweight gold coins as a form of savings for low-income individuals and families. This was to address a need for gold ownership amid tough economic times in their community. 


"The idea stemmed from the community's need to own gold amid the difficult living conditions the people live in," the coin creator Ahmed Hamdan told the Jerusalem Post (JP). His 21-carat gold coins feature the Dome of the Rock Shrine located in Jerusalem and are licensed and stamped by the Hamas-run Ministry of Economy in Gaza.


Though the coins are licensed, the head of policy at Gaza Economy made it clear they are not legal tender. "It mustn't be interpreted as if it were a future currency. It is no more than a way of saving," Osama Ofal told the Jerusalem Post


Despite their lack of currency status, some Gazans are viewing the investment as safer than the currencies offered. Adel Al-Rafati, a public servant who purchased 3.5 grams of coins, views his purchase as a prudent way to save. "I can't buy heavy grams, but these tiny grams are easier to get. I can save because gold is a safer haven than other currencies," Al-Rafati told the news outlet outside the gold store. 



A Brief History of Palestine’s Currency Changes Since 1917


Prior to the British takeover of 1918 and being placed under UK administration by the League of Nations in 1922, Palestine was governed by the Ottoman Empire. It circulated the Ottoman Lira (or pound) in Palestine as the nationally used currency. Before General Allenby captured Jerusalem in 1917, he issued a proclamation declaring the use of the Turkish currency illegal in sectors under British rule. Instead, he replaced the Ottoman Lira with the Anglo-Egyption Pound — although the Ottoman coins still circulated throughout the country for some time. Palestine was officially occupied by the British in October of 1918.


Following the takeover of Jerusalem, Britain was persuaded by Israeli Zionists to issue the Balfour Declaration, an instrument which committed Britain to “favour the establishment in Palestine of a national home for the Jewish people, and will use their best endeavors to facilitate the achievement of this object, it being clearly understood that nothing shall be done which may prejudice the civil and religious rights of existing non-Jewish communities in Palestine…” It was this document that arguably initiated the large-scale immigration of Jews into Palestine from 1922 to 1947, especially during the Nazi regime of the 1930s.


Though Palestine was in the hands of the British, it was not until the peace conference held in San Remo in 1920, where the Ottoman Empire’s former territories were split among the Allies, would Palestine be mandated to the British Empire. The League of Nations approved the mandate in 1922, which came into force in 1923. This resulted in Palestine becoming, “a distinct political entity for the first time in centuries.” Against this backdrop, Palestine created its own national currency: the Palestinian Pound. It was put into circulation—replacing the Egyptian Pound—on November 1, 1927.



The Division of Palestine and the Impact on Local Currency 


In 1947, the United Nations voted to have Palestine split into two separate states—one Arab and one Jewish, with Jerusalem being an international city. The Arab states rejected this option and the decision was never implemented. Following this, Britain pulled out of Palestine in 1948 and the Jewish Agency declared the State of Israel. This move resulted in conflict with surrounding Arab nations -  Jordan, Egypt, Lebanon, Syria and Iraq. The war ended in 1949, with armistice lines drawn showing Jordan in possession of what is currently known as the West Bank, and Egypt in control of Gaza. 


With these events, the currency in Gaza changed to Egyptian Pounds, and the West Bank began using the Jordanian Dinar. Areas under the control of Israel began using the Israeli Lira, or Pound.  



The War of 1967 and Onwards: Palestine’s Currency Changes Again


In 1967, conflict once again erupted with the result being Israel gaining control over Gaza, the West Bank, and East Jerusalem. Israel also captured most of the Syrian Golan Heights and the Egyptian Sinai Peninsula at this time. With these locations again changing hands, the local currency in these areas was once more altered. This time, the Israeli Lira was circulated in Gaza and the West Bank—replacing the Egyptian Pound and Jordanian Dinar. 


Though these key locations would not fall under the control of a country other than Israel in the coming years, their currency still underwent minor changes due to economic conditions. Due to devaluations against local currencies in the 1960s and 1970s, and Israel’s desire for a currency with a Hebrew name, the Israeli Pound was replaced with the Shekel (or Sheqel) in 1980.


The arrival of the Israeli Shekel did not halt the hyperinflation that reared its head in the middle of the 1980s, with inflation rates as high as 450%. To counter these astronomical climbs, the Israeli government issued the New Israeli Shekel (NIS) as its new currency, with a value of 1,000 old shekels to 1 NIS. 


The NIS was also adopted in areas under Israeli control, including Gaza and the West Bank. 


 

Sources


Aljazeera, The Nakba did not start or end in 1948, May 23, 2017.



Britannica, History of Israel, n.d.



Centre For Israel Education, New Shekel Is Introduced, n.d.



Engage in Palestine, Money Matters, n.d.


Global Financial Data, Palestine, n.d.


International Trade Association, West Bank and Gaza - Country Commercial Guide, October 6, 2023.


Jewish Virtual Library, Balfour Declaration: Text of the Declaration, n.d.




Office of the Historian, Creation of Israel, 1948, n.d.





The Excellence Centre in Palestine, Currency and Money, n.d.


The Jerusalem Post, Gaza dentist makes gold coins in lieu of currency, September 7, 2023.


The World Factbook, Gaza Strip, January 23, 2024.



 

Brett Surbey

Brett Surbey


Brett Surbey is a corporate paralegal and freelance writer based out of Canada. His work has appeared in numerous publications including Publishers Weekly, US News and World Report, Forbes Advisor, Industry West Magazine and various academic journals. He lives with his wife and their two children in northern Alberta.

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