Tokyo stocks have tumbled 2.97 per cent as the US dollar turned sharply lower against the yen, denting shares of major Japanese exporters.

The benchmark Nikkei 225 index on Friday ended down 432.95 points at 14,129.98, while the Topix index of all first-section shares lost 2.93 per cent, or 35.26 points, to 1,167.06.

“The weaker dollar is the main culprit, partially on growing belief that the (US Federal Reserve) will opt to keep up its easing policy and make less use of rhetoric about ‘tapering’ its bond-buying program, which has proved to be a powerful dollar support in the past,” said an equity trading director at a foreign brokerage.

“The start to the present earnings reporting season has also not been rosy – most likely as a result of unrealistic expectations. Players are now going to eye next week’s results with even greater scrutiny, with the US Fed’s July 30-31 meeting also coming up,” he added.

The policy meeting will provide clues as to when the Fed will start rolling back its stimulus scheme aimed at stoking the world’s largest economy. A tapering of the program would mean fewer dollars in the financial system, boosting demand for the unit.

The US dollar fell to its lowest level in about two weeks against the Japanese currency on Friday, trading at Y98.70 compared with Y99.24 in New York and well off the Y100.00 level in Tokyo on Thursday.

The value of the yen tends to influence the Tokyo stock market as it has a direct impact on the profitability of exporters such as Toyota and Sony.

Friday’s decline saw investors booking profits ahead of the weekend as the earnings season gets under way.

Also providing a little support to the yen was news that Japan logged its first monthly price rise in more than a year in June, although the hike was mainly driven by surging energy costs.

Nissan slumped 1.34 per cent to Y1,097 after it said on Thursday net profit rose 14 per cent in April-June, but warned that its performance was held back by poor demand in China and Europe.

Other carmakers also fell, with Toyota down 3.60 per cent at Y6,150.

Canon sagged 2.46 per cent to Y3,165 after lowering its full-year earnings forecast because of worse-than-expected economic conditions in China and slowing demand for its digital cameras.

Uniqlo clothing chain operator Fast Retailing lost 3.27 per cent to Y35,450.