By Gina Lee

Investing.com – The dollar was down on Friday morning in Asia. But losses were minimized as growing concerns about a dampened investors’ risk appetite.

At 9:57PM ET (2:00 AM GMT), the Index that monitors the greenback against various currencies was down 0.7% to 96.685. This index fell further from 96.938, the highest in 17 months, which it reached on Wednesday. The index was still up by 0.73% for the week. It is now on track to record its fifth weekly gain.

It was at 114.68, down 0.5%

The pair dropped 0.63%, to 0.7145. However, Australian’s month-on-month growth was better than expected at 4.9%. This was a decrease of 0.422% from 0.6830.

Both the pair grew by 0.9% to 6.3920 and fell by 0.12% at 1.3304.

At 16.17 dollars per dollar, the rand plunged to its lowest level in more than a year. There are growing concerns about the B.1.1.529 COVID-19 mutation discovered in South Africa which may make vaccines less efficient.

Shinichiro Kadota a senior FX strategist at Barclays said that COVID-19 fears are clearly playing a role, which is why there’s more demand for safe havens like the yen.

In Europe, a rising number of COVID-19 cases prompted Germany to consider following neighbor Austria’s lead and re-impose a lockdown.

The U.S. Federal Reserve is now more optimistic about an interest rate rise by 2022. However, counterparts in Europe, Japan, and Japan are still more cautious.

Haruhikokuroda, Bank of Japan governor, reiterated last week his commitment to huge monetary stimulus. On Thursday the released signaled that continued stimulus is being offered and that there will be a careful approach to making any changes to existing policies.

“If the COVID-19 situation worsens, then dollar-yen could go down further, but otherwise the monetary policy divergence is definitely going to be weighing on the yen in the medium term,” said Barclay’s Kadota, who predicts dollar-yen will strengthen to 116 and beyond by mid-2022.

The flipside, however, is that 114 will provide the floor for currency pairs in the immediate term “unless the world changes really for the worst”, he said.