* Dollar down 0.3 percent vs yen at 90.10 yen
* Obama bank plan hurts risk sentiment
* Euro on track for 1.5 percent fall vs dollar on week
* Aussie weighed by China tightening speculation, tax plans
(Recasts, adds quotes, updates prices)
By Tamawa Desai
LONDON, Jan 22 (Reuters) - The dollar edged lower while the yen gained on Friday as investors pared back riskier trades as global stocks fell after U.S. President Barack Obama announced plans the previous day to limit risky trading by U.S. banks.
The U.S. currency usually benefits from risk aversion, but the plan posed a downside risk for U.S. bank profits and the economy, weighing on the dollar.
But analysts debated whether a one-way sell-off in the dollar would continue.
"Although the impact of Obama's proposed banking regulation changes is clear enough on equities, currency markets seem to see the implications as ambiguous," said Adam Cole, global head of fx strategy at RBC Capital Markets.
"A sharp fall in dollar/yen was the most notable movement and as one of the few trades that is simultaneously short risk and short dollar, further weakness would be our favoured way of playing downside equity risk," he added.
The dollar hit a five-week low of 89.78 yen, according to electronic trading platform EBS. By 1216 GMT, it was at 90.10 yen, down 0.3 percent on the day.
The yen continued to benefit as investors unwound risk.
The euro hit a 9-month low against the yen of 126.55 yen. But further falls were limited as the pair held key chart support of 127 yen, traders said.
Obama's proposals, which require congressional approval, would prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund.
The rules would also bar institutions from proprietary trading operations, unrelated to serving customers, for their own profit.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.1 percent at 78.249.
TRIPLE WHAMMY
Obama's proposals were just the latest setback in a market hampered by fiscal concerns in euro zone peripheral economies and by speculation China would take more steps to withdraw liquidity to stem inflation.
Concerns about the fiscal situation in Greece and other smaller euro zone countries pushed the euro to a 6-month low against the dollar this week.
The euro was up 0.2 percent at $1.4130 but still on track for a 1.5 percent decline for the week.
"Taken together the three issues add considerably to uncertainty about prospects for the global recovery, with the possibility of a serious restriction of Chinese credit the most important factor," Barclays analysts said in a note.
Any signs of further tightening in China is considered bad for commodity-linked currencies like the Australian dollar. China is Australia's biggest trading partner.
The Australian dollar was on track to fall 1.8 percent on the week.
Analysts said the Aussie would also be hampered on a play by the Australian government to lift taxes on mining companies, which have been making bumper profits from surging metals and coal prices. (Additional reporting by Jessica Mortimer)