Dollar inches up against yen in Asia as traders weigh possible Japan interest rate hike

The dollar inched up against the yen in Asia Friday amid debate over whether Japan's central bank would raise interest rates next week.

The dollar was trading at 119.36 yen midafternoon Friday, up from 119.33 yen overnight in New York. The euro fell to US$1.3135, from US$1.3150.

Analysts are divided over whether the Bank of Japan will raise its benchmark interest rate at a policy meeting next week after the government said Japan's gross domestic product in the fourth quarter rose 4.8 percent at an annual pace. Some saw weakness in the data, while others believed it was compelling enough to spur a rate hike.

Also, Japanese investors and overseas fund players squared positions on the last Asian trading day before the lunar year begins on Feb. 18. Many markets around Asia will close in observance of the holidays, although Japan will remain open.

"Many players, who are concerned over a possible yen jump due to monetary tightening, have already started to close their positions," said Hiroshi Imaizumi, a senior dealer at Resona Bank, reports AP.

Other traders said the yen could get a boost on the view that the U.S. Federal Reserve won't raise interest rates in the near future, following slightly dovish remarks from Fed Chairman Ben Bernanke earlier this week.

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