Dollar down in Asia after Obama victory
07 Nov 2012
The dollar fell broadly in Asia today on news of president Obama's election victory, as his re-election was seen ensuring that the Federal Reserve's quantitative easing would continue.
While the Democrats are certain to gain a majority in the Senate, the Republicans are well on track to retaining the control they have held over the House of Representatives. Meanwhile, the election will hardly make a difference to mitigating the risk of policy paralysis over the looming "fiscal cliff" a sharp fiscal tightening due to start next year
The dollar's index against a basket of major currencies was down 0.4 percent to 80.309 DXY, down lower from Monday's two-month high of 80.843.
In addition to Obama's support for quantitative easing, to which Romney and many Republicans are opposed as a dangerous intervention that could stoke inflation, Obama's tougher stance on financial regulations is seen to be positive for bonds and negative for stocks.
Around $600 billion in government spending cuts and higher taxes would kick in next year, unless US lawmakers took steps to mitigate their impact.
While analysts are hopeful of a compromise of sorts to be reached by the end of the year between the two parties, investors are worried about a replay of last year's showdown that caused a downgrade of the US credit rating.
