Shekel Depreciates After Elections

The Israeli shekel depreciated by more than 1% to 3.1 per USD on October 28, 2026, its weakest level since April, as investors reacted to the country’s legislative election results. Partial results, with more than 66% of ballots counted, indicated that Prime Minister Benjamin Netanyahu’s bloc was on track to secure 56 seats, while challenger Gadi Eisenkot’s bloc was projected to win 48 of the Knesset’s 120 seats. Arab-led parties, aligned with neither camp, were expected to secure 16 seats. With neither side approaching the 61 seats required for a parliamentary majority, the results pointed to a potentially prolonged political deadlock, with coalition negotiations likely to prove challenging and raising concerns over the formation and stability of the next government. Meanwhile, Israeli financial markets came under pressure, with the TA-125 benchmark index falling nearly 3% and the yield on 10-year government bonds rising above 4.1%.