The rupee on Thursday ended almost flat at 72.59 to the US dollar after initial strong gains were erased by fag-end dollar demand from importers despite government measures to stem currency volatility.

Steady capital outflows against the backdrop of tumbling local equities, ongoing global trade war concerns and surging oil prices kept forex sentiment under stress.

The Indian unit seesawed its way through out the trade, having initially opened strong reacting to overnight government decision to raise import duties on select items to check rupee slide.

Despite the initial bounce, the home unit appears to struggle, as the US dollar remained broadly firm following the hawkish comments from Fed President Gerome Powell and bullish US economic projections.

As expected, the Federal Reserve hiked another quarter-percentage and pointed to a further rate hike in December.

However, the much-awaited Federal Reserve's rate hike failed to have much impact in emerging Asia and the reaction among investors was muted.

The domestic currency hovered between a high of 72.38 and 72.78.

The government on late Wednesday raised import duties on 19 non-essential items as it looks to check the widening current account deficit and tackle a sharp slide in the rupee.

Meanwhile, the Reserve Bank of India allowed banks to dip further into statutory cash reserves in a bid to ease a liquidity squeeze afflicting the nation's money markets.

The latest move by the central bank follows concerns engulfing the non-banking financial companies (NBFCs) over tight liquidity conditions.

Crude prices rose by nearly 1 per cent, driven by the prospect of a shortfall in global supply once US sanctions against major crude exporter Iran come into force in just five weeks' time.

The Brent crude futures contract was up 59 cents at $81.38 a barrel in early Asian trade.

Domestic bourses came to a yet another uninspiring trading day, as traders squared off positions on the expiry of September series future and options contract.

The domestic currency got off to a strong start at 72.42 compared to Wednesday's close of 72.60 at the inter-bank foreign exchange market (forex) here.

It gained ground to hit a session high of 72.38 in mid-morning deals, but was unbale to hold on and relinquished all those gains touching a low of 72.78 in late afternoon trade due to heavy month-end dollar demand.

However, the local unit managed to recoup all losses and finally settled the day at 72.59, a gain of one paisa.