The dollar strengthened on Friday and posted its best performance in seven years thanks to aggressive monetary tightening by the Federal Reserve and concerns about global growth prospects, Reuters reported.

The U.S. dollar index is up more than 8 percent this year, the most since 2015. It was last steady at 103.99.

The Fed has raised rates by a total of 425 basis points since March to curb rising inflation, which has kept the dollar down for most of the year.

But expectations that the central bank might not have to raise rates as high as previously feared have caused the dollar to curtail its rapid rally. The dollar index fell more than 7 percent this quarter.

"I expect the king dollar to lose its crown and the dollar to make a more decisive turn by the middle of next year," Bank of Singapore currency strategist Moh Siong Sim said.

The Bank of Japan in the face of a hawkish Fed has hurt the Japanese yen. The yen has fallen more than 13% since the start of the year, its worst performance since 2013.

But last week's unexpected change in the Bank of Japan's bond yield controls led investors to bet that the central bank might soon abandon its controversial policy entirely, triggering a recovery in the fragile currency.

The yen last rose 0.4 percent to 132.47 per dollar.

The euro fell 0.04% to $1.0656 and is expected to fall more than 6% this year under pressure from a combination of weak growth in the euro zone, the war in Ukraine and the Fed's hawkish stance.

The euro fell below parity against the dollar earlier this year for the first time in nearly two decades.

The pound fell 0.01% to $1.2053, seemingly ending a tumultuous year full of political drama with a drop of nearly 11%, the worst since 2016.

Policymakers at the European Central Bank and the Bank of England have signaled further rate hikes next year in an attempt to tame inflation even at the risk of hurting their economies.

The pvstralian dollar was approaching a year-long decline of nearly 7 percent and was last up 0.02 percent to $0.6778.

The offshore yuan, which last stood at 6.9701 to the dollar, was expected to fall nearly 9% year-over-year, its worst annual rate since such data first became available in 2011, as China continues to feel the effects of its strict COVID restrictions.