JOHANNESBURG (Reuters) - South Africa's rand hit a two-week high on Wednesday as U.S. President Barack Obama won a second term in the White House, signalling a continuation of the economic policies of the world's biggest economy.
The rand was at 8.6050 to the dollar at 0656 GMT, 0.3 percent firmer than its close in New York on Tuesday.
After Obama defeated Republican opponent Mitt Romney in a close contest, the dollar weakened, supporting emerging market currencies such as the rand.
"The initial response has been for the markets to price in a continuation of what already exists, i.e. big government that needs to borrow large sums of money that in part will be funded through more dollar-debasing quantitative easing," analysts at Tradition Analytics wrote.
The longer-term implications of Obama's victory for the rand are not clear cut.
While it suggests a continuation of quantitative easing, which would bolster the rand, a gridlocked Congress could mean the so-called "fiscal cliff" will be difficult to avert.
"With mixed power in Washington, the chance of hitting the fiscal cliff has increased ? rand negative," Rand Merchant Bank analysts wrote.
"With Obama back in the seat, war with Iran and aggressive domestic spending cuts look less likely, while the probability of a second term for Bernanke and therefore more QE have increased ? rand positive."
Government bonds were steady, with the yield on the 2026 and 2015 instruments barely changed at 7.650 percent and 5.480 percent respectively.
Source: http://news.yahoo.com/africas-rand-hits-two-week-high-obama-win-070418205--finance.html
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