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The Indian rupee climbed 23 paise in early trade on Wednesday, pulling back from record lows as a sharp drop in global oil prices gave domestic markets a breather.

The rupee opened at 95.00 against the U.S. dollar and quickly strengthened to 94.95. This marks a significant turn after the currency hit a historic trough of 95.33 last week.

Oil Prices Ease Pressure

The primary driver for the rebound was a cooling energy market. Brent crude, the global benchmark, dropped toward $108 per barrel.

Markets reacted positively to signals of a potential peace deal in the Middle East. Lower oil prices reduce India's trade deficit, as the country imports nearly 80% of its petroleum needs. When oil is cheaper, the demand for dollars to pay for these imports falls, supporting the rupee.

RBI Defenses 

The rebound also comes as the Reserve Bank of India (RBI) explores "crisis-era" measures to protect the currency. Reports suggest the central bank is considering:

• Encouraging state lenders to issue foreign-currency bonds.
• Mobilizing dollar inflows from Non-Resident Indians (NRIs).
• Removing withholding taxes for overseas government bond investors.

These discussions have signaled to traders that the RBI is ready to act aggressively to prevent the rupee from sliding further toward the 96-mark.

The rupee’s recovery mirrored gains in other Asian markets. The South Korean Won and Thai Baht also strengthened as the U.S. Dollar Index (DXY) retreated from recent highs.