The Israeli shekel fell sharply on Tuesday as fears of political instability and the delay in forming a new government took a toll on the economy

The dollar traded at around 3.16 shekels, a drop of about 4.5 percent in one week compared with 3.02 shekels on election day, while the euro climbed to around 3.54. Demand for foreign currency is coming from every direction, from institutional investors to private households. The rise is causing concern because it makes imported goods more expensive and could speed up inflation, and the Tel Aviv Stock Exchange also traded lower.