The dollar dropped from five-year highs against the yen Friday as investors reduced bets on the greenback amid caution ahead of a U.S. Federal Reserve policy meeting next week that may herald a wind-down of its massive stimulus measures.
While market participants in general expect the Fed to pare back its stimulus no later than March, a growing number expect a small reduction in the Fed's asset purchases from next week. The central bank holds a two-day policy meeting Dec. 17-18.
In early New York trading, the dollar fell 0.2 percent to 103.17 yen, after hitting 103.92 in Asian trading, its highest level since October 2008. Traders said there are bids in the 103-yen area and if that goes, there could be more selling of some short-term longs ahead of the weekend.