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Heavy selling by foreign banks pushed the shekel up against the dollar in the currency market yesterday, after the local currency's representative rate was set for the day. Relieved with the end of the uncertain pre-election period, indices on the Tel Aviv Stock Exchange recorded gains.

The representative rate of the dollar was set at NIS 4.881 - down 0.12 percent from its Monday rate. There was no trade on Tuesday because of the elections. In late afternoon trade, however, the dollar took a pounding, diving 0.65 percent to NIS 4.849.

The euro also ultimately lost ground against the shekel in choppy trade - ending 0.12 percent down at NIS 5.309. But the European currency also sank in late trade, losing 0.84 percent against the shekel to close at a rate of NIS 5.264.

Dealers reported that the session had been relatively slow, as the market gradually digested the results of the election. Most of the action by foreign banks came after the official rates had been set for the day.

Over the last month-and-a-half, the dollar-shekel exchange rate climbed NIS 0.25, primarily due to concerns on the part of the foreign banks about greater political instability after the elections. "Within moments of the representative rate being set, market players realized that at that level, nobody was buying dollars, and the dollar began to dive," related Guy Magen of the Excellence brokerage house.

The main factor weakening the shekel was U.S. President George W. Bush's speech yesterday, he added.

Bush hinted in his State of the Nation address yesterday that America was deadly serious about its intentions to attack Iraq, thereby undermining the dollar in favor of the euro on world markets.

Indices on the Tel Aviv Stock Exchange fluctuated yesterday as well. Here, however, it was clear that securities were gaining strength as the day progressed. By the end of the day's trading, the Tel-Aviv 25 was 0.7 percent up, at 315 points, while the Tel-Aviv 100 had gained 0.6 percent.