The euro rose against the dollar on Friday after a German business sentiment survey beat forecasts, suggesting Europe's largest economy is picking up and making further euro zone monetary easing less likely. After strong gains on Thursday, the yen remained firmer as weak equity markets helped the safe-haven currency recover after its recent hefty falls.

The Indian rupee weakened on Friday, falling 1.3 percent for the week, extending its losing streak to a third successive week, hurt by concerns about a possible pullback in global fund flows and the country's external deficit. The rupee found support from the central bank's plan to ease hedging rules for exporters and importers, a move which is expected to increase supply of dollars.

The European Central Bank is looking into expanding its range of policy tools, while the US central bank is mulling scaling back its support measures, highlighting the contrasting fortunes between the world's two biggest economic blocs. ECB Executive Board member Peter Praet said late on Wednesday that the central bank could try new policies if needed to battle deflation risks, adding that the central bank was also weighing measures to encourage more lending in the euro zone.