The Indian rupee recorded its strongest single-day gain in nearly a month, appreciating by nearly 50 paise against the US dollar after reports that Saudi Arabia plans to reduce crude oil prices for Asian buyers. The decline in crude prices is expected to lower India's import bill, improve market sentiment and provide support to the domestic currency.

Rupee closed at about 94.97 to the US dollar after gaining following its performance in the previous trading day. According to the traders, the rupee was boosted by the reopening of crude oil supply through the Strait of Hormuz.

Decline in crude oil prices across the globe made it easy for India, because it put less pressure on its current account and its inflation expectations, thus building up confidence among foreign investors. Dollar selling overseas and FII purchases in domestic stocks also played a vital role in making the rupee strengthen.

Jateen Trivedi, Vice President – Research Analyst (Commodity and Currency) at LKP Securities, said the rupee's sharp appreciation was largely driven by expectations of lower crude oil prices following Saudi Arabia's reported price cuts for Asian buyers. He added that easing geopolitical concerns and improving market sentiment further supported the domestic currency, though volatility could continue depending on movements in crude oil prices and the US dollar.

Despite this good performance, traders remain wary about the continued threat posed by geopolitics in the Middle East to crude oil prices and currency exchange rates around the world. According to analysts, the future trend of the Indian rupee will be determined by oil prices, foreign investments, and US dollar index.