Dubai: The Reserve Bank of India (RBI) Tuesday hiked benchmark interest rates by a quarter percentage point, its sixth increase this year, in an attempt to curb stubborn inflation.

The RBI increased its main repo rate — the rate at which it lends to commercial banks — to 6.25 per cent.

The reverse repo rate — the rate it pays to banks for deposits — was also increased to 5.25 per cent.

The rupee gained 10 paise to 44.37/38 against the dollar yesterday on selling by banks and exporters amid weakness of the American currency overseas. According to a forex dealer, dollar selling by some banks and exporters on the back of a weak dollar overseas helped the rupee to rise.

In the UAE, Dh1 was exchanged for less than Rs12 yesterday. Many exchange houses offered rates in the range of Rs11.95 to Rs11.99 in the afternoon. In the days ahead analysts expect the rupee to strengthen further.

"We did not see a sharp rise in rupee [trading] yesterday because the interest rate hike was widely anticipated," said Pradeep Unni, an analyst with Richcomm.

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