MUMBAI: The Indian rupee surged against the dollar on Friday on expectations of a less hawkish Federal Reserve stance on interest rates, clocking its biggest weekly advance since December 2018.

The rupee on Friday jumped to 80.7950 per US dollar from 81.8075 in the previous session. That helped the local unit post a 2% increase this week.

The rupee’s weekly surge came on the back of a slide in dollar index, which was accelerated by the softer-than-expected US inflation data.

The data made it highly likely that the Fed will deliver a smaller sized rate hike at its next meeting. Fed futures now assign a near 85% probability that the US central bank will raise rates by 50 bps in December, as against the 75 bps it opted for in the last four meetings.

Goldman Sachs has pencilled the Fed to slow the pace of rate increase to 50 bps in December and 25 bps each in February and March.