Israel's Deadlocked Exit Polls and the Shekel: Risk When Coalition Talks Replace a Result

Key takeaways

1. With about 71% of votes counted, Israeli media projected 54 seats for Netanyahu's bloc and 47 for Eisenkot's, both short of 61; definitive results were expected on Thursday (Reuters).

2. The shekel weakened around 2% to 3.1185 per dollar, on track for its worst day in 16 months, and the Bank of Israel's representative rate rose 1.6% to 3.128 (Reuters; Bank of Israel).

3. More than half a million double-envelope ballots remained and coalition formation could take weeks, so the event risk extends well beyond one session (Ynet; Reuters).

The development

Israel voted on Tuesday, and polls closed at 20:00 UTC with turnout of 77.7% (BBC, citing the Central Elections Committee). Exit polls from Kan and Channel 13 put Benjamin Netanyahu's bloc and Gadi Eisenkot's "Change Bloc" on 51 seats each in the 120-seat Knesset (BBC). The count then moved towards Netanyahu's camp. With some 71% of votes tallied, Israeli media projected 54 seats for his bloc, 47 for Eisenkot's and 19 for Arab parties, leaving both main blocs short of the 61 needed for a majority; definitive results were expected on Thursday (Reuters). With all regular polling stations counted, about 85.6% of votes, the tally stood at 53, 48 and 19, and more than half a million double-envelope ballots, including soldiers' votes, were still to be counted (Ynet, citing the Central Elections Committee).

The shekel reversed its election-day rally. On Tuesday the dollar had briefly fallen below 3.02 shekels (Globes). On Wednesday the shekel weakened around 2% to 3.1185 per dollar, on track for its worst day in 16 months, and Tel Aviv's benchmark index fell around 3% as the market reopened (Reuters). The Bank of Israel's representative rate was set at 3.128, up 1.6% from 3.078 on Monday, the last rate before the election holiday (Bank of Israel).

Market transmission

Reuters linked Tuesday's gains to high turnout, which had raised the prospect of a change in government. A deadlock replaces one event with a sequence: the final count, the president's consultations, coalition talks and, if those fail, another election, with Netanyahu heading a caretaker government in the meantime (Reuters). The risk premium is then paid gradually rather than released, and Wednesday's move was the first instalment.

What to monitor next

• The double-envelope count and the definitive results expected on Thursday (Reuters), and any seat shifts they bring.

• The president's consultations with party leaders and the first coalition statements, including from the Arab parties.

• Oil and regional security headlines, since the war with Iran keeps Brent near $114 a barrel (Reuters).

Reusable lesson

Plan for the process, not only the headline. When an election can produce a hung result, map the follow-up events in UTC and treat each as its own risk point. Exit polls are estimates: here the two blocs moved from a 51–51 tie to a seven-seat gap in the partial count. Size exposure for the period of uncertainty, not just the night of the count. Note also where price discovery happens when the home market is closed: US-listed Israel funds traded thinly after hours on Tuesday, one on a volume of five units (Globes). Prices in those conditions say little about the clearing level.

Invalidation and risk

The deadlock narrative would weaken if the remaining ballots give one bloc a clear path to 61 seats, and a quick coalition agreement could restore part of the rally. William Jackson of Capital Economics told Reuters the next government "will probably be fragile". The shekel is less liquid than the major currencies, and spreads can widen sharply on unscheduled political headlines. JPMorgan estimated in August that election day could move the shekel by up to 3% in either direction (Globes).

Glossary

Exit poll: A survey of voters leaving polling stations, used to project results before the official count.

Kingmaker: A party whose support is needed for either side to form a majority government.

Price discovery: The process by which trading establishes the market value of an asset.

Sources

Reuters (via The Globe and Mail) (2026-10-28): Israeli stocks fall, currency weakens as Netanyahu bloc projected to win more seats than expected

Bank of Israel (2026-10-28): Representative exchange rate, US dollar (3.128 on 28 Oct; 3.078 on 26 Oct). https://www.boi.org.il/en/economic-roles/financial-markets/exchange-rates/

Ynet (2026-10-28): Israel election results: Netanyahu bloc at 53 seats, Eisenkot bloc at 48 as nearly all votes counted (citing the Central Elections Committee)

BBC News (2026-10-28): Israeli exit polls suggest no clear winner in pivotal general election

Globes (2026-10-27): Following the exit polls: the shekel narrows its gain against the dollar (Hebrew; title translated)

Globes (2026-10-27): First indication: how markets are reacting to the exit poll results (Hebrew; title translated)

Reuters (via Euronext) (2026-10-28): Stocks get AI lift, dollar holds steady ahead of Fed decision

Disclaimer

This note is provided by the SummitFx Project for general education and market context only. It is not investment advice, not a solicitation to buy or sell any instrument, and not a personal recommendation. Foreign exchange and related markets are leveraged and can result in the loss of some or all of your capital. Figures are believed accurate at the time of research and may already be stale. Always verify live prices, official releases, and your own risk limits before acting. Past market behaviour does not determine future results.