TOKYO: Japan’s Nikkei share average dropped more than 1% on Monday, weighed down by a stronger yen that pressured exporters, while investors looked ahead to currency talks between Japanese and U.S. finance chiefs later this week.

The Nikkei ended 1.3% lower at 34,279.92, while the broader Topix slipped 1.2% to 2,528.93.

“Investors bought back stocks as the Nikkei extended losses during the session, but the buy-back did not last long. But it is not like what happened earlier this month, where any drop in the index drove further sell-offs,” said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

“The market was not ready to become a risk-on mode yet.”

The yen rose to a seven-month high against the dollar as shaky confidence in U.S. assets was exacerbated by U.S. President Donald Trump’s attacks on the Federal Reserve.

A stronger yen typically weighs on exporter shares by reducing the value of overseas earnings when converted back into Japanese currency.

Automakers declined, with Toyota Motor and Honda Motor slipping 2.9% and 1%, respectively. Suzuki Motor lost 3.9%.

Finance Minister Katsunobu Kato plans to visit Washington later this week, where he is expected to meet U.S. Treasury Secretary Scott Bessent for discussions on currency rates.

Shares of domestically focused companies advanced, with the railway sector rising 0.86%, while the retail sector was little changed, edging up 0.03%.

The pulp and paper sector rose 3.5%, making it the top performer among the Tokyo Stock Exchange’s 33 industry sub-indexes.

Oji Holdings jumped 6.68% to become the top percentage gainer in the Nikkei after the paper products maker raised its dividend payout ratio and announced a share buyback.

Nitori Holdings, an operator of home interior goods stores which relies heavily on imports for materials, jumped 2.8%.

Reuters