TOKYO, Jan 22 The dollar edged up towards a four-year high against the yen on Monday as t

TOKYO, Jan 22 (Reuters) The dollar edged up towards a four-year high against the yen on Monday as the Japanese currency suffered from the Bank of Japan's decision to hold interest rates steady last week.

The yen took a beating after the BOJ left rates at just 0.25 per cent last Thursday, raising questions about whether the central bank had bowed to government pressure against a move after many had expected a rate rise just days before.

Japan's very low interest rates have prompted investors to sell the yen and use the funds to buy higher-yielding currencies in carry trade while mobilising Japanese investors to seek better returns in foreign assets.

''Recent developments surrounding the BOJ should reinforce our yen bearish view,'' said currency strategists at JPMorgan Chase in a note to clients.

''Insofar as politics will exert a greater impact on BOJ policy-making, the present low interest rate environment is likely to persist, providing continued support for short-yen carry trades,'' they said.

The dollar was also on a solid footing after upbeat U.S.

consumer sentiment data late last week capped a week of strong economic reports that reinforced the outlook for the Federal Reserve to hold interest rates steady in the months ahead.

The dollar edged up to 121.38 yen from near 121.20 yen in New York trade late on Friday, pushing back towards the peak of 121.60 reached last week -- the highest since March 2003.

The euro climbed to 157.35 yen from near 157.10 yen, near the all-time high of 158.06 yen struck earlier this month.

The single European currency was little changed near $1.2960 REUTERS MQA BST0618