The dollar closed higher Friday in quiet trading, with dealers cautious ahead of any possible developments in the Persian Gulf crisis.

The dollar finished at 1.5665 German marks, up from Thursday's close of 1.5610 marks. The U.S. currency also inched up to 138.45 Japanese yen from 138.00 Thursday.Dealers said several factors led to the listlessness of Friday's trading.

"It was Friday, month-end, quarter-end, the start of a Jewish holiday (Yom Kippur) and the final day of Japan's half-fiscal year. There were about 53 reasons not to deal," said John McCarthy, chief trader for Amsterdam-Rotterdam bank in New York.

The yen's slide was the focus of Friday's market, said one trader. But he argued that the yen will ultimately resume its ascent, due to the strength of Japan's economy and rising Japanese interest rates.

He said the yen was not hurt much by the 3.6 percent drop in Tokyo stock prices Friday, which sent them to their lowest levels since March 1987.