Blackburn are searching for a new boss after John Eustace left for Derby County, with Lee Carsley and Gary O’Neil among the frontrunners.
Caretaker David Lowe oversaw a 2-0 win over West Brom as Rovers continue their push for promotion.
"I could really see Steven at Blackburn," Murphy told Spin Genie.
"I think he would jump at the opportunity if he was offered the job. It's a great location in terms of where he is from and they have some good young players and are really pushing in the right direction.
"He might consider what he has learned in Saudi and who is making the decisions at the club. I'm of the mindset that all managers are improving when they are in roles and he would've definitely improved at both Aston Villa and in Saudi.
"I think being in Saudi was just to keep him ticking over after Aston Villa and you could argue that was the role that came too early in his managerial career, even though he started well there. He would have learned a lot of lessons from that and with the Blackburn job, I think he'd jump for the opportunity."