Nikkei Rallies Amid Firmer Yen and Steady BOJ Interest Rates

Japan's Nikkei share average rose on Friday despite a stronger yen and steady interest rates post-Bank of Japan's policy decision. The yen's gain impacted exporters' overseas revenues, while bond yields edged higher. Awaiting BOJ Governor Ueda's commentary, markets anticipate careful messaging on future rate hikes.

Japan's Nikkei share average saw a 1.9% rise to 37,861.31 on Friday, following an early rebound driven by chip-sector stocks and Wall Street's rally. Despite mid-recess gains of 2.1%, the yen strengthening against the dollar by 0.3% to 142.15 capped the gains.

The Bank of Japan (BOJ) opted to keep short-term interest rates steady at 0.25%, consistent with expectations. Bond yields also ticked up, with the two-year and 10-year Japanese government bonds each gaining 0.5 basis points. The yen's rise after BOJ's optimistic consumption outlook lowered the value of revenues for exporters.

Experts are closely watching BOJ Governor Kazuo Ueda's upcoming news conference. Shoki Omori of Mizuho Securities noted a tendency toward cautiously hawkish sentiments to potentially telegraph a December or January rate hike without unsettling the markets significantly.

(With inputs from agencies.)