Replace a string in shell script using a variable

If you want to interpret $replace, you should not use single quotes since they prevent variable substitution.

Try:

echo $LINE | sed -e "s/12345678/${replace}/g"

Transcript:

pax> export replace=987654321
pax> echo X123456789X | sed "s/123456789/${replace}/"
X987654321X
pax> _

Just be careful to ensure that ${replace} doesn't have any characters of significance to sed (like / for instance) since it will cause confusion unless escaped. But if, as you say, you're replacing one number with another, that shouldn't be a problem.

you can use the shell (bash/ksh).

$ var="12345678abc"
$ replace="test"
$ echo ${var//12345678/$replace}
testabc