The Nikkei rose 0.85% to close at 53,333.54, while the broader Topix ended 0.31% higher at 3,563.59.
The market was cautious earlier in the session with all eyes on the yen that had spiked against the U.S. dollar on Friday and climbed to a more than two-month high overnight.
Speculation grew over coordinated currency intervention by U.S. authorities following remarks from Japan’s prime minister and a leading currency diplomat. “The yen weakened toward the end of the session and that supported the market,” said Shuutarou Yasuda, market analyst, Tokai Tokyo Intelligence Laboratory.
Chip-related shares rose, with Advantest jumping 5.85% and Tokyo Electron rising 2.53%.
The gains of those shares were underpinned by South Korea’s KOSPI, said Yasuda. The Korean index rallied to a new peak despite President Donald Trump’s latest threat to hike tariffs on autos and other imports from the country.
Back in Japan, Sony Group stock fell 1.58%, weighing most heavily on the Topix, while Toyota Motor slipped 0.52%.”The current level of the yen is negative for exporters, but positive for the election campaign,” said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management.
Japanese political parties kicked off an election campaign on Tuesday after Prime Minister Sanae Takaichi called for a national election on February 8.
A stronger yen is positive for Takaichi, who backs loose monetary policy, said Ueno. A weaker yen raises import costs, driving inflation and putting pressure on the central bank to tighten monetary policy. Tokyo Electric Power fell 7.925% to become the worst percentage loser on the Nikkei after the utility firm announced plans to cut about 3.1 trillion yen ($20 billion) in costs over 10 years.