. By Gina – The dollar was down on Friday morning in Asia. But losses were minimized as growing concerns about a newly discovered COVID-19 variant dampened investors’ risk appetite.The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.07% to 96.685 by 9:57 PM ET (2:57 AM GMT). The index moved further away from 96.938, its highest level in nearly 17 months hit on Wednesday. However, it was up 0.73% on the week and set for its fifth straight weekly gain.The USD/JPY pair was down 0.58% to 114.68.The AUD/USD pair fell 0.63% to 0.7145, even as Australian retail sales grew a better-than-expected 4.9% month-on-month in October. The NZD/USD pair was down 0.42% to 0.6830.The USD/CNY pair inched up 0.09% to 6.3920 while the GBP/USD pair edged down 0.12% to 1.3304.The rand fell to a more than one-year low, at 16.17 per dollar, with concerns mounting about the B.1.1.529 COVID-19 variant discovered in South Africa that could make vaccines less effective."COVID-19 worries are definitely playing a role in increasing demand for safe havens including the yen, and because South Africa is the location of this new variant, that's an obvious reason to avoid the rand," Barclays senior FX strategist Shinichiro Kadota told .In Europe, a rising number of COVID-19 cases prompted Germany to consider following neighbor Austria’s lead and re-impose a lockdown.Meanwhile, an increasingly hawkish tone from the U.S. Federal Reserve has increased bets of an interest rate hike by mid-2022, while counterparts in Europe and Japan stick to more dovish stances.Bank of Japan governor Haruhiko Kuroda reiterated his commitment to massive monetary stimulus last week, while the minutes from the European Central Bank's October meeting, released on Thursday, signaled continued stimulus and a cautious approach to any policy changes."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.On the flip side, 114 should provide a floor for the currency pair in the near term, "unless the world really changes for the worse," he added.