Japan is an export-oriented country and the country has the third-largest economy in the world. This fact, once more underlines the importance of Japan and its economy. It is not surprising that the government, as well as the officials from the Bank of Japan, are keeping a close eye on foreign exchange rates following Joe Biden’s victory.
Importantly, Democrat Joe Biden will become the next president of the largest economy in the world. As stated above, the Bank of Japan is monitoring the forex market after Biden’s win.
It is worth mentioning that, they are concerned that any sharp rise in the yen’s value against the dollar will deal a serious blow to the local economy. As a reminder, the economy is already struggling to cope with the coronavirus pandemic.
Moreover, the pandemic is not over yet, and it is hard to determine how long it would take to return to the pre-coronavirus levels. Unfortunately, the pandemic created a lot of challenges for the local as well as the global economy. The U.S. has the highest number of cases in the world, but in other countries, the situation is also quite complex.
Financial markets and politics
Let’s get back to the forex market. People should consider that financial markets were rattled by Donald Trump’s surprise victory in the 2016 U.S. presidential election. The value of the dollar fell from 105 yen to 101 yen.
Importantly, a higher yen hurts Japanese exporters by making their products less competitive overseas. The country’s central bank plans to continue its monetary easing policy. Interestingly, it is considering expanding and extending its coronavirus relief measures. The measures are set to expire at the end of March 2021. The country’s government, as well as the central bank, are working hard to boost the local economy. The Bank of Japan is watching the forex market as officials want to control the situation.