The rupee appreciated by as much as 20 paise to 79.10 against the US dollar on Thursday amid gains in domestic equities as crude oil prices stayed off their recent peaks. The strength in the rupee came a day after the RBI announced measures to increase the foreign exchange inflow.

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Crude oil prices edged higher from near three-month lows hit in the previous session, as fears of a potential global recession spurred concerns about demand. Brent and WTI futures were last up 0.2 percent each, at $100.9 a barrel and $98.7 a barrel respectively.

The dollar index — which gauges strength in the greenback against six peers including the euro, the sterling and the yen — held steady close to a 20-year high, keeping gains in the rupee in check.

The RBI on Wednesday raised overseas borrowing limits for companies and liberalised norms for foreign investments in government bonds, among measures aimed at boosting foreign exchange inflows and curb weakness in the rupee.

“The announcement on liberalisation of forex flows is a welcome decision and is viewed as a win-win scenario for both banks and NRIs. We look at this as a proactive move keeping in perspective the background of global financial and geopolitical instability combined with recent increase in Fed rates and a weakening rupee," said Shyam Mani, Head-SME and NRI Banking at CSB Bank.

The central bank said that all capital flows barring portfolio investments remain stable and an adequate level of reserves provides a buffer against external shocks.

Amit Pabari, Managing Director at CR Forex Advisors, is of the view that the RBI's measures might take time to attract sustainable inflows.

"With the RBI’s move, the pace of depreciation in the rupee can get slower but the risk remains on the upside til the sentiment turns positive and the currency sustains below 78.50 levels," he said.

The rupee had settled at 79.30 against the US currency on Wednesday.

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