TOKYO (Kyodo) -- The yen rose around 1 yen to the lower 155 level against the U.S. dollar on Friday after the Bank of Japan raised its policy interest rate from 0.25 percent to 0.5 percent, its highest level in about 17 years.

Speculation grew that the central bank would continue to increase interest rates after it lifted projections for inflation after a two-day policy meeting, dealers said.

Stocks erased earlier gains and turned lower at one point after the yen strengthened, with the Nikkei benchmark briefly losing more than 100 points.

At 1 p.m., the dollar fetched 155.48-49 yen compared with 156.02-12 yen in New York and 156.60-62 yen in Tokyo at 5 p.m. Thursday.