TOKYO: Tokyo stocks closed lower on Friday as a stronger yen against the dollar weighed on the Japanese market.

The benchmark Nikkei 225 index lost 1.68 percent, or 550.45 points, to 32,307.86, while the broader Topix index fell 1.50 percent, or 35.44 points, to 2,324.47.

“The Nikkei index started with sharp falls as investors were disheartened by a rapid yen appreciation,” Iwai Cosmo Securities said, adding declines in shares were led by automakers.

The yen strengthened more than two percent against the dollar on speculation the Bank of Japan (BoJ) could announce a shift away from its ultra-loose monetary policy at a meeting this month.

BoJ governor Kazuo Ueda said at a parliamentary committee on Thursday that handling monetary policy “will become even more challenging from the year-end and heading into next year”.

The dollar fetched 143.88 yen in Asian trade, down from 144.10 yen in New York on Thursday and 147.31 yen on Wednesday.

In Tokyo trading, Toyota tumbled 4.08 percent to 2,680.5 yen, and Honda lost 2.57 percent to 1,458 yen.

Shipping firms were also hit sharply by the higher yen, with Kawasaki Kisen dropping 3.65 percent to 5,012 yen, and Nippon Yusen sliding 2.00 percent to 3,863 yen.