It's possibly Arabic, but it's most likely Persian Farsi. The first word is "Rahim", which does translate as "Merciful" but could be a given name. Muslims, like Christians (who use Biblical names), frequently use Quranic names, which generally translate to some glorifying adjective. The last letter in the second word bears similarity to the Arabic letter Y, but it's missing the pair of dots that go below the curve; in Farsi, the dots are absent.
Arabic Y
Farsi Y
(The last letter is the Y.)
The pic is kinda blurry, so it could be that the Y's dots are not as deeply etched as on the other letters, which would make pat-tekker-cat's friend's translation correct, even if the transliteration is not. The letters in the second word are A, M, N, h, A, N, I. It probably reads, "Rahim Amnehani", and the "Amnehani" is most likely a name. Depending on the age, it could very well be a local emir's plate etched with his personal title. Just 2c from a former US Navy linguist...
I would take it (or send pics of it) to a university anthropology department, or a history museum. They could give you the best answers.