Fredericks, an International Olympic Committee (IOC) member, has not resigned from his position but will not attend the world athletics ruling body's council meeting in London next month, Coe said.
The Namibian is being investigated by the IOC ethics panel regarding an alleged payment he received from a now-banned athletics official before the 2016 Olympics was awarded to Rio de Janeiro.
"I have spoken to him (Fredericks) regularly since this issue came out and he decided to step away from all this as he needs time to sort all this," Coe told reporters before Sunday's world cross country championships in Uganda.
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"He also indicated that he will not attend the Council meeting in London."
Fredericks, a former sprinter who won four Olympic silver medals at the 1992 and 1996 Games, has denied any wrongdoing following the allegations published by French newspaper Le Monde.
He stepped down this month as head of the team evaluating bids to host the 2024 Olympics.
The IAAF has been plagued by alleged doping and bribery controversies in recent years and Coe said earlier this week that he could not be certain that further officials would not be indicted.
(Reporting by Tom Hayward in London, editing by Ed Osmond)
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