sheqel, also spelled shekel, pl. sheqalim or shekels

1a. any of various ancient units of weight, esp. a Hebrew unit equal ot about 252 grains Troy
1b. a unit of value based on a shekel weight of gold or silver
2. a coin weighing one shekel
3. (pl.) money
4. The current unit of currency of Israel, represented by the symbol IS, and divided into 100 agorot.

Definitions from Merriam-Webster's Collegiate Dictionary, Tenth Edition (for shekel)

The root for sheqel is sh-q-l (shin kof lamed), the root used for "to weigh". Thus, the use of "sheqel" to name a unit of currency is similar to the same use of "pound" in English (but predates it by very many years).

In biblical times:

Sheqel was a measure of weight, often mentioned when specifying the amount silver or gold paid (e.g. in Genesis 23:15, Abraham pays 400 silver sheqels for the Machpelah's cave to bury Sarrah in).

24th February 1980:

• The Israeli Sheqel (IS) was introduced as an Israeli monetary unit, to replace the Israeli Pound, and given the value of 1 Sheqel : 10 Israeli Pounds.
• The New Agora which replaced the existing Agora was given the value of 1 New Agora : 10 Agoras.

4th September 1985:

As a response to the massive inflation in Israel, the following reforms were made:

• The New Israeli Sheqel (NIS) was introduced and given the value of 1 New Sheqel : 1000 Sheqels.
• The original Agora was reintroduced and given the value of 1 Agora : 10 Sheqels.
• A new currency sign was introduced - ₪.

As of October 2001:

The New Israeli Shekel is the Israeli national currency, along with Agora, which is the 1/100th of a New Israeli Sheqel. In colloquial speech, it is referred to simply as "sheqels" and "agoras".

New Israeli Sheqels are available in 1, 5 and 10 sheqel coins and 20, 50, 100, 200 and 500 sheqel banknotes.