The rupee strengthened by 5 paise to 94.46 against the US dollar in early trading on Friday, helped by expectations of higher foreign inflows and an improvement in risk appetite.

According to forex traders, the rupee is likely to retain its strength on the back of robust underlying inflows and continued RBI intervention. However, rising crude oil prices and the possibility of tensions between the US and Iran may cap further appreciation.

In the interbank foreign exchange market, the rupee began the session at 94.53 against the US dollar and subsequently firmed to 94.46, marking a 5-paise gain over its previous close.