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* 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 (Reuters) - 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 anticipated, it did not alter its earlier forecast for a total of three 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 100.26, after earlier coming within a tick of the overnight low of 100.21, its lowest level since Feb. 9. It was down 1 percent for the week.
Against the yen, the dollar edged up 0.1 percent to 113.44 , down 1.2 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 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 Tokyo.
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 yen could face pressure from a domestic scandal involving a land deal that is chipping away at the government's support ratings. Japanese Prime Minister Shinzo Abe has so far denied firsthand involvement.
"Some market participants may worry about Abe's scandal.... Currently, we just have rumours, and are waiting to see what happens," Murata said. "The risk that it could eventually lead Abe to resign seems quite small, but is not zero."