The shekel is weakening Tuesday morning on growing expectations of early elections, on the government's struggles to push through a tight budget for 2003. Key coalition members, including the Labor and Shas parties, are balking at the budget, because of ostensible harm to the weaker segments of society. Prime Minister Ariel Sharon stated Monday that he is determined to call a snap election if he can't get the budget through by October. The currency session opened today with the dollar hovering at about NIS 4.675. But by noon it had gained 0.4% against the shekel to NIS 4.69. Trading volumes are low, dealers say. They see no evidence of a trend change, dealers add. Meanwhile, the market is waiting the Federal Reserve's decision on U.S. interest rates, to be announced today at 21:15 Israel time. A Fed decision to lower lending rates would weaken the shekel, as it would narrow the shekel-dollar interest rate gap, now standing at 7.35%. Local pundits believe the Fed will leave the rates intact for now, though. Speculators are gambling on just that. Elements undermining the shekel include the uncertainty surrounding the budget and early elections, and the always-present possibility of an escalation in violence. Fears include not only terror attacks by Palestinians in Israel, but a regional uproar if the United States attacks Iraq, resulting in missile strikes on Israel and severe Israeli retaliation.