Rupee gains as dollar slips against yen

Rupee ended off-lows as the dollar gave up its early gains versus the yen in afternoon trade, causing a sell-off in the dollar/rupee as well.

But rupee retraced some of its gains because of last minute dollar short covering by banks. Rupee ended at 44.8900 per $1 compared with 44.8600 per $1 Wednesday.

Wednesday, the dollar fell globally after weak U.S. data affirmed views that the U.S. economy was slowing down. But, in Asian trade, the dollar shrugged off its overnight losses and traded higher.

The Indian unit too opened lower, taking cues from the dollar's recovery abroad. Thereafter, the rupee traded in a thin range as dollar demand from importers and its supplies from exporters were matched.

Oil companies were said to be buying dollars around 44.90 per $1 while selling interest from exporters lent strong support to the rupee at 44.95 per $1.

However, rupee rose above the key 44.90 per $1 level as the greenback failed to sustain its gains versus the yen. The dollar fell versus the yen after a Japanese ministry official remarked that economic recovery in Japan had little reasons for the yen to weaken.

The rupee touched an intra-day high of 44.86 per $1, but trimmed gains by 3 paise as some banks covered positions that had been sold earlier.