The yen was on course for its first weekly dollar gains of 2007 in early foreign exchange trading on Friday after EU finance ministers said that the Japanese currency is too cheap.

The dollar was valued at ¥120.76 in London on Friday, down from ¥120.82 yesterday and ¥121.54 last week. On the euro the yen traded at ¥157.21 from ¥156.99 last week.

"The possibility investors will buy back the yen has increased dramatically," Okasan Securities dealer Tsustomu Soma told Bloomberg.

French and German finance ministers have both said that they will raise concerns about the yen's fluctuations, which hit a four-month high yesterday, at a G7 meeting next week.

"People who sold the yen are nervous about comments intended to curb its weakness as the G7 approaches."

US treasury secretary Henry Paulson has said that he is taking a more relaxed outlook on the yen however, saying that the currency's value is based on "fundamentals".