Congratulations President Obama! While it turned out to be a modestly close race, there was really never any doubt who would win. Obama was first elected President to manage America?s changing role in the world, and, in his second term, the imperatives are clear. First of all, fix the finances, which will turn out to be much easier since the Tea Party is clearly over, with most of the misogynistic crazies losing their Senate races.
At the same time, his government will invest, not spend ? wish we could have our government understand that as easily. In his acceptance speech, he listed the areas of importance: education, technology, and climate change. He didn?t mention infrastructure, but that is also certain to be on the agenda, particularly after Sandy.
All of this, and a sharp decline in political bickering (the Tea Party is over, remember) will pick up the US economy, which was, in any case, showing some positive signs. This will also bolster the dollar, which, again, has been showing some signs of strength. With the Euro needing to weaken to sustain the single currency project, this fits in rather neatly.
Thus, I continue to expect a strong dollar in 2013, with the DXY likely crossing 85 (from the current 80 or so), and weaker commodities. The rupee will be volatile, on the one hand, weak as a result of the current account deficit, and on the other supported by renewed inflows. I expect a range of 51 and 57 over the next six months.
The writer is CEO, Mecklai Financial