The rupee appreciated 0.29% to close at 68.57/$ Thursday.
"The collapse in crude prices following the above developments cheered the sentiment for rupee," said K Harihar, treasurer at Firstrand Bank. "The cheer in the stock market also aided the positive sentiment for the rupee."
With domestic equities rising, it has rekindled hopes of bringing back foreign portfolio investors, who exited emerging markets seeking safety of safe-heaven assets amid global uncertainties. Overseas investment will create demand for the local currency.
Speculation were rife that United States could have a deal with Iran, which is the largest supplier of oil to India, one of the biggest importers of the black gold.
Crude oil declined 7% to reach $73 a barrel, in the wake of some favourable speculation. Gulf media reported Wednesday that the Libyan National Oil Corporation was reopening four export terminals.