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The government and Bank of Japan officials are keeping a close eye on foreign exchange rates following Democrat Joe Biden’s victory in the U.S. presidential election.

They are concerned that any sharp rise in the yen’s value against the dollar will deal a serious blow to the Japanese economy already struggling with the coronavirus pandemic, sources familiar with their thinking said.

Financial markets were rattled by Donald Trump’s surprise victory in the 2016 U.S. presidential election, sending the value of the dollar tumbling to ¥101 from ¥105.

In Tokyo foreign exchange trading on Friday, the dollar dropped below ¥104, hitting eight-month lows as prospects for Biden’s win weakened safe-haven appetite for the U.S. currency.

A higher yen hurts Japanese exporters by making their products less competitive overseas. The benchmark Nikkei stock average hit a 29-year high on Friday, but a strong yen could dampen sentiment.

The BOJ plans to continue its monetary easing policy. It is considering expanding and extending its coronavirus relief measures, set to expire at the end of March next year.

But the central bank could be forced to consider additional stimulus measures if the yen rises sharply against the dollar, the sources said.

The government is considering assembling a third fiscal 2020 supplementary budget to stimulate the economy. It may be forced to add measures to cushion the impact of a strong yen, the sources said.

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