By Anirban Nag
LONDON (Reuters) - The yen hit a three-week low against the dollar on Friday and was set for its biggest weekly fall in 17 years after data pointed to stabilization in the Chinese economy, bolstering global risk sentiment.
The dollar rose to 106.32 yen
For the week though, the dollar has rallied 5.2 percent against the yen, putting it on track for its best weekly performance against the yen since February 1999, as expectations of a huge stimulus from Japan weighed on the yen.
Such speculation has come to the fore after former Federal Reserve Chairman Ben Bernanke visited the Bank of Japan earlier this week, fuelling talk BOJ Governor Haruhiko Kuroda might provide "helicopter money", which would involve the central bank directly financing government spending.
Government and central bank officials directly involved in policymaking, however, have said there is no chance Japan will resort to "helicopter money".
The euro gained 0.6 percent to 117.80 yen (EURJPY=R), while even the battered British pound rose 0.6 percent to 141.42 yen (GBPJPY=R).
"The Chinese data is helping risk sentiment. Overall, we have had some good headlines this week, like more political stability in the UK, expectations of more Japanese stimulus and all these are contributing to investors selling the yen," said Yujiro Goto, currency strategist at Normura.
Latest data from China showed growth, industrial output and retail sales all beat forecasts, indicating there was some resilience in the economy. That is expected to underpin the recent buoyancy of world markets while investors await a better reading from the post-Brexit referendum period in the coming weeks.
"There had been some concerns about the (Chinese) economy but the latest numbers show that it's doing alright," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.
The yen is regarded as a safe haven currency partly because of Japan's net creditor status. As a result, the yen tends to rise in times of market stress, but often comes under pressure when investor risk appetite improves.
Sterling gained 1 percent to $1.3481