The Indian rupee on Friday strengthened further against the US dollar to appreciate up to Rs 83.48 per dollar during the day, before settling at 83.57 per dollar—a two-month high. The local currency witnessed its highest weekly gain in the current calendar year. The domestic unit appreciated by 0.4 per cent against the dollar during the week.

The Indian currency has been on a recovery path since September 11 when it had settled at 83.99 against the American currency, a tad higher than the lowest level of 84.09 recorded on August 5.

The Indian rupee is expected to open higher on Friday and add to its weekly advance, boosted by healthy risk appetite and bets the U.S. Federal Reserve will push borrowing costs further lower.

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The dollar dropped after the Federal Reserve on Wednesday cut interest rates by half a percentage point, citing greater confidence that inflation will continue to recede to the U.S. central bank's 2% annual target.