how higher interest rates weaken a currency

News that the US fed bank may increase the interest rates caused the dollar to weaken against other currencies.

This can be best explained with the help of an example. Suppose 1 dollar is currently equal to 42 Indian rupees. So now if the fed bank increases interest rates borrowing money will be more expensive. So with say 84 rupees I can borrow 2 dollars currently at the interest rate of 8.5%. If the interest rate is hiked, borrowing dollar becomes more expensive.

At this time the dollar values is then weakened to say Rs 41. In this way I can buy more dollars with the same 84 rupees but will give higher interest rate.

This is all done to even out higher interest rates so the customer borrowing is not affected by much.

Also as a general rule, higher interest rates will create less demand for a currency and hence its value will fall