LONDON: The dollar fell against the yen on Friday, and was on course for its first weekly drop in three months against a basket of currencies after Federal Reserve policymakers expressed concerns about the impact of the greenback's strength.
Global growth worries, which sent stocks and commodities down across the board, saw the safe-haven yen hit a five-week high against the euro.
The drop in oil prices to a four-year low below $90 took its toll on the Norwegian crown.
Norway's currency, which has a strong correlation with oil prices, sank to its weakest in three weeks against the euro as September inflation data also dipped below forecasts. The euro was 0.7 percent up at 8.2690 crowns per euro.
The single currency was down 0.5 percent against the yen at 136.36 yen, just off the low of 136.34. "A combination of fears about European growth, about Chinese growth and Ebola have started to get people a little bit worried, and it's unsurprising that the yen has begun to move somewhat," said Marvin Barth, European head of currency strategy at Barclays in London.
The dollar was also down against the Japanese currency at 107.65 yen, close to a three-week low of 107.50 yen.
After surging around 10 percent in five months against a basket of currencies to reach a four-year high of 86.747 last Friday, the dollar has retreated more than 1 percent and is heading for its biggest weekly fall in more than a year.
In a speech on Thursday, Fed Vice Chairman Stanley Fischer said the dollar's exchange rate was "appropriate" but added that the US central bank would watch the currency for its impact on aggregate demand.
That followed minutes on Wednesday of the Fed's most recent meeting, which showed policymakers expressing concern that the dollar's strength could slow a necessary rebound in inflation. There were also worries about global growth.
The fact that the Fed was talking about the dollar was "very significant", said Stephen Gallo, European head of currency strategy at BMO Capital Markets in London. "What the Fed did was verbally intervene in the currency markets," Gallo said.
Investors have taken the Fed's hints about the dollar as evidence it might bide its time on any rise in interest rates that would boost the currency, sending the dollar down and stocks up. Futures markets have pushed back expectations for a first rate hike to September next year from July.
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