Nikkei closes higher after BOJ chief calms fears of aggressive rate hike

Japan’s Nikkei share average reversed losses to close higher on Tuesday after comments from Bank of Japan Governor Kazuo Ueda calmed fears of aggressive interest rate hikes.

The Nikkei closed up 0.26 percent at 38,776.94 after falling 0.6 percent earlier in the session on the back of a stronger yen and concerns over U.S. tariffs. The index lost 1.2 percent for the week.

Ueda said the central bank was ready to increase government bond purchases if 10-year yields rose sharply.

“Ueda’s comments pushed down Japanese government bond yields, which led to a weaker yen. This increased demand for Japanese stocks,” said Masahiro Ichikawa, chief market analyst at Sumitomo Mitsui DS Asset Management.

Rising inflation has boosted expectations that the Bank of Japan will continue to raise interest rates at a rapid pace, sending yields on Japanese government bonds to their highest levels in a decade this week.