The shekel weakened in morning inter-bank trading today. The shekel-dollar exchange rate is up 0.48%, compared with Friday's representative rate, at NIS 3.735/$, and the shekel-euro exchange rate is up 0.12% at NIS 4.977/euro.

In international markets, the dollar is being traded at $1.33/euro against the euro and at yen89.59/$ against the yen.

Foreign currency traders are waiting for tomorrow's general Knesset election. Prime Minister Benjamin Netanyahu will almost certainly establish the next government, but if the trend seen in the polls continues, he may find it difficult to form a stable coalition.

A review by Bank Hapoalim on the results of past elections and their effect on local trading says that the elections will have only a marginal effect on the market. "In the short term, the market may suffer from weakness, less because of the elections themselves, and more because of concerns about an austerity budget and the challenges that the Israeli economy will face in the coming months," says the bank.

FXCM Israel says, "According to the polls, although the identity of the next prime minister is known, the pending distribution of Knesset seats could make it very difficult for him to form a stable coalition that will be able to conduct a responsible economic policy. These concerns are liable to weigh on the shekel and accelerate a turn in favor of the dollar."

Published by Globes [online], Israel business news - www.globes-online.com