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NEW YORK, Dec 28 AFP

December 29 2012, 10:57AM

The yen has edged higher against the US dollar after days of declines on expectations Japan would implement more monetary easing under its new prime minister.

The US dollar stood at 85.98 yen around 0900 AEDT down from 86.09 late on Thursday.

In Asian trade earlier in the day, the yen sat at more than two-year lows against the greenback.

Investors have been selling the yen on expectations newly-elected Prime Minister Shinzo Abe will carry out his promises of more aggressive monetary easing and big government spending to lift inflation and kickstart the economy.

While noting that Abe and members of his government have "made it abundantly clear" that they won't back away from their promises, BK Asset Management noted that "dollar/yen appears to be nearing exhaustion and a move down to 85 is likely."

"After climbing to a fresh 2-year high overnight, dollar/yen staged a sharp intraday reversal that left the pair near the day's lows," they said.

The euro also slipped slightly against the yen around 0900 AEDT reaching 113.62 yen, compared to 113.97 yen a day earlier.

The common European currency lost a little ground to the US dollar, standing at $US1.3217 after hitting $US1.3235 late on Thursday.

In other currencies, the US dollar inched up to 0.9134 Swiss francs, while the pound rose to $US1.6167.