* Dollar index on track for weekly losses
* Yen gains despite this week's dovish BOJ
* Hawkish BoE hints give sterling a lift
TOKYO, March 17 The dollar licked its wounds in
Asian trading on Friday, wallowing at five-week lows against a
currency basket and on track for weekly losses after the U.S.
Federal Reserve signalled fewer interest rate hikes than some
investors had expected.
Although the U.S. central bank delivered an interest rate
increase on Wednesday as widely expected, it did not alter its
original forecast for two more rate increases this year. That
disappointed dollar bulls who had hoped for hints of a possible
fourth hike in 2017.
The dollar index, which gauges the greenback against
a basket of six major rivals, edged down 0.1 percent to 100.25,
plumbing its lowest level since Feb. 9 and down 1 percent for
Against the yen, the dollar was flat on the day at 113.35
, down 1.3 percent for the week ahead of a Tokyo public
holiday on Monday.
The yen gained despite sharply diverging monetary policy
expectations. On Thursday, the Bank of Japan held its policy
steady as expected and maintained a pledge to cap long-term
interest rates around zero.
BOJ Governor Haruhiko Kuroda said an uptick in inflation
toward 1 percent won't immediately trigger an interest rate
hike, signalling that Japan will stick to its ultra-easy policy
even as other major economies eye withdrawing stimulus.
Kuroda, who heads to Germany for a Group of 20 finance
leaders' meeting this weekend, shrugged off market speculation
the BOJ may raise its target on bond yields later this year,
when consumer inflation is expected to approach 1 percent due
mostly to a rebound in fuel costs and rising import prices from
a weak yen.
"The Fed is going to continue to continue to hike rates, so
we don't see any reason to aggressively buy the yen more," said
Masashi Murata, senior strategist at Brown Brothers Harriman in
U.S. data on Thursday underscored the U.S. economy's solid
underpinnings. Homebuilding increased 3.0 percent last month and
jobless claims fell in the latest week.
The recently resurgent euro added 0.1 percent to $1.0770
, up 0.9 percent for a week in which Dutch centre-right
Prime Minister Mark Rutte fended off an election challenge from
anti-Islam politician Geert Wilders. Concerns about the election
outcome had pressured the single currency.
The European Central Bank will decide at a later time
whether to raise interest rates before or after ending its bond
purchase programme, ECB policymaker Ewald Nowotny told a
newspaper on Thursday.
Sterling edged down 0.1 percent to $1.2349 after
hitting a two-week high of $1.2373 overnight, after the Bank of
England kept rates on hold but gave a handful of hints in voting
results and its minutes that it might raise them soon.
The pound was up 1.5 percent for the week, after outgoing
BoE policymaker Kristin Forbes unexpectedly voted for a rise in
interest rates, and others signalled it would not take much for
them to follow suit.
(Reporting by Tokyo markets team; Editing by Randy Fabi)