Forex

There are growing fears that further rises in Indian interest rates will be needed after inflation hit its highest rate since records began 13 years ago.

Wholesale prices went up by 11.42% in the 12 months to 14 June, which was higher than had been expected.

Earlier in the week, the Reserve Bank of India (RBI) raised interest rates from 8.0% to 8.5% in an attempt to keep inflation under control.

It was the second increase in interest rates in two weeks.

The government has cut duties on items such as crude oil as well as cutting exports of rice to try to keep prices down, but interest rates are still expected to have to go up again.

"We expect inflation to head higher in the coming months and peak somewhere between 12 to 13%," said A Prasanna from ICICI Securities.

"In order to reinforce its policy stance, the RBI will hike rates in the course of the year."