TOKYO: Japan’s Nikkei share average ended lower on Friday after a stronger yen weighed on export-oriented stocks, while gains in chip-related stocks limited losses.

The Nikkei fell 0.68% to close at 36,581.76, after opening 0.13% higher. For the week, the index rose 1.2%.

The broader Topix fell 0.82% to 2,571.14 and slipped 0.19% for the week.

“The stock market has been so closely linked with the currency market because investors are worried about the impact of the yen rising below 140 to the dollar on corporate earnings,” said Kentaro Hayashi, a senior strategist at Daiwa Securities.

“But we expect domestic firms can boost their profits even as the yen rises to around 130. So the market might be too sensitive to the yen’s move.”

The yen rose to its highest level since Dec. 28 of 140.645 per dollar ahead of next week’s central bank bonanza, where the focus is on the US Federal Reserve and the size of its expected interest rate cut.

The Bank of Japan is expected to keep the rate unchanged at a policy meeting next week but the market expects another rate hike by the end of this year.

Rubber makers fell 1.54% to become the worst performers among the Tokyo Stock Exchange’s (TSE) 33 industry sub-indexes. The automakers’ index fell 1.52%, with Toyota Motor and Honda Motor losing 2.31% and 1.44%, respectively.

Heavyweight Fast Retailing, the owner of the Uniqlo brand, fell 1.39% to drag the Nikkei the most. Gym operator and entertainment company Konami Group lost 3.8%. Chip-related stocks rose, with Tokyo Electron rising 1.72% and Advantest up 1.3%.