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REFILE-Israel markets shrug off another election call, shekel at 2008 peak

(Fixed 2 1/2 to 12 1/2 in first paragraph.)

JERUSALEM, Dec 23 (Reuters) - The shekel posted a 12-1/2-year high versus the dollar and stocks and bond prices rose on Wednesday, as Israel’s financial markets shrugged off the announcement of a fourth election in two years.

Israel will hold a snap election on March 23 after parliament failed on Tuesday to meet a deadline to pass the 2020 budget, triggering a ballot presenting new challenges for Prime Minister Benjamin Netanyahu.

The shekel gained another 0.1% to a rate of 3.225 against the dollar.

“The writing was on the wall and the continued appreciation of the shekel in recent days, along with the decline in yields in the bond market, indicate that local markets are hardly moved by the upcoming elections,” said Modi Shafrir, chief strategist of Mizrahi Tefahot Bank’s finance division.

Israel’s currency has appreciated more than 6% versus the dollar this year to its highest level since mid-2008 in a move largely downplayed by the central bank.

Bank of Israel Governor Amir Yaron last week described the dollar-shekel weakness as a global phenomenon.

He said a current account surplus in Israel’s balance of payments caused by the COVID-19 crisis, which crimped imports and sent energy prices tumbling, have also led the shekel to appreciate.

Still, Yaron said, the central bank would continue to intervene when the shekel’s appreciation got too steep. The bank has bought some $17 billion of foreign currency so far this year - $1.9 billion coming in November.

Israeli government prices were up marginally at midday, while the broad Tel Aviv 125 share index was up 0.3%.

In the absence of a 2020 budget, Israel is using a pro-rated version of the 2019 fiscal package initially passed in mid-2018, and interim funding measures are also in place. A 2021 budget would not be approved until at least May.

Editing by Jeffrey Heller, Larry King

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