Tokyo investors will keep their eyes on forex trading next week after a plunging yen catapulted the Nikkei index to within spitting distance of last year's high. A US Federal Reserve policy meeting will also be on market players' radar screens as they look for signs of a sooner-than-expected interest rate hike, which would likely send the dollar even higher against the Japanese currency.
On Friday, the Nikkei 225 index at the Tokyo Stock Exchange rose 0.25 percent, or 39.09 points, to end at 15,948.29, its best finish since early January. The headline index rose 1.78 percent over the week.
The broader Topix index of all first-section shares rose 0.19 percent, or 2.48 points, to finish at 1,313.72. It climbed 1.55 percent over the week.
The Nikkei is now within a few hundred points of its 2013 high amid growing expectations that the Bank of Japan (BoJ) will soon expand its monetary easing programme.
"As we've seen in recent sessions, most of the buying is based on the weakening yen, not on anything fundamental," an equity trading director at a European brokerage told Dow Jones Newswires.
"The economic numbers since the April 1 tax hike were not at all encouraging. Expectations from overseas investors for more easing steps remain."
On Thursday, BoJ Governor Haruhiko Kuroda told Prime Minister Shinzo Abe that he would widen the central bank's monetary base if necessary as it looks to hit a 2.0 percent inflation target next year - a key part of Tokyo's bid to conquer the deflation that long weighed on Japan's economy.
"If we face difficulty achieving that goal, we would adjust monetary policy without hesitation, even if it takes the form of additional easing or anything else," Kuroda told reporters in Tokyo after meeting with Abe.
The central bank last week held off further stimulus despite a sharp contraction in the economy between April and June largely owing to the April sales tax hike, in turn boosting expectations that the BoJ will act at its next meeting in October.