Why is the CAD to INR Exchange Rate Up today on 15th February 2023 (1st half of February 2023)?

Key points:

• The exchange rate from CAD to INR is going up.
• The Bank of Canada raised interest rates.
• The Reserve Bank of India has increased the interest rates to 6.5% and is expected to raise interest rates by 25 bps in February 2023.
• Inflation and Unemployment rates are up in India and Canada.

In recent years, the Canadian dollar has become more valuable than its Indian rupee equivalent by a factor of five. As of February 1, 2023, one Canadian dollar is equivalent to 61 Indian rupees. On February 14, 2023, the index hit a record high of 62.28. However, three days ago, it reached a new record low of 61.07. One Canadian dollar currently buys about 61.57 Indian rupees. The trend curve has been highly volatile in the past two weeks, with a standard deviation of 0.083 rupees. Changes in exchange rates reflect the appreciation of the Canadian dollar in recent months. The minimum acceptable price is sixty Indian rupees. Initially, you could buy this item for 50–55 rupees. Previously $50, now $60. Overvaluation of the currency, foreign-capital imbalance, rising gas prices, and surging demand are all possible explanations.

CAD to INR Exchange Rates (1 CAD into INR)
Date	Open	High	Low	Close
Feb 01, 2023	61.38	61.60	61.26	61.40
Feb 02, 2023	61.54	61.87	61.43	61.53
Feb 03, 2023	61.55	61.70	61.07	61.56
Feb 06, 2023	61.16	61.59	61.16	61.29
Feb 07, 2023	61.50	61.65	61.46	61.50
Feb 08, 2023	61.83	61.83	61.44	61.83
Feb 09, 2023	61.42	61.63	61.31	61.44
Feb 10, 2023	61.31	61.76	61.22	61.31
Feb 13, 2023	61.23	61.98	61.23	61.60
Feb 14, 2023	61.89	62.28	61.80	61.89
Feb 15, 2023	62.09	62.10	61.58	62.10

Several factors affect the CAD to INR exchange rates:

1. Crude Oil
2. Commodity Prices and Import/Export
3. Interest rates
4. Inflation rates
5. Unemployment rate and Job Availability
6. Budget deficit and national debt levels
7. Politics and international policies

1. Crude Oil

India is home to a sizable population. This source meets about 80% of India's annual crude oil demand. The fluctuating price of crude oil is a good barometer of the global economy's health. The highest price recorded was CAD 108.04 on February 10, 2023. On February 6, 2023, it was only 96.82 Canadian dollars. It's possible to take heart from the passage, but its fluidity reduces its reliability.

If the price of crude oil were to drop, it would be more economically feasible to produce, transport, and sell. The Indian government should slow the printing of new rupees to boost the currency's value.

Crude Oil (in CAD)
Date	High (CAD)	Low (CAD)	Close (CAD)
Feb 01, 2023	106.09	101.19	101.67
Feb 02, 2023	102.54	99.52	100.73
Feb 03, 2023	103.87	97.35	97.73
Feb 06, 2023	99.84	96.82	99.31
Feb 07, 2023	104.30	99.93	103.68
Feb 08, 2023	105.21	103.21	105.07
Feb 09, 2023	105.21	102.12	104.17
Feb 10, 2023	108.04	104.19	107.22
Feb 13, 2023	107.68	104.79	107.04
Feb 14, 2023	106.14	103.28	105.41
Feb 15, 2023	105.59	103.06	104.85

The commodity is so crucial that even Canada depends on it heavily. In most cases, the profit from selling crude oil is greater than the costs incurred to produce it. They will make even more money by 2022, though. In Q2 2022, they spent $1,754,000.00 on crude oil imports. Typically, it's between $1 billion and $1.5 billion, which is a lot of money compared to their starting salary. The Canadian dollar might appreciate if the cost of imported crude oil increases.

The Indian rupee's depreciating value versus the Canadian and US dollars, however, is predicted to persist.

2. Commodity Prices and Import/Export

Canada and India have both made international purchases in the past. Materials such as metal ores, plastics, rubber, chemicals, and fuels are also included. The Canadian dollar to Indian rupee exchange rate is significantly affected by the elements above. A country's economy's strength is correlated with its currency's value.

In August of 2022.2, Canada spent $9.702 trillion on energy-related products. The value of plastics and rubber in Canada is $1046 million, chemicals $153 million, metal ores and concentrates $100 million, and petroleum products in their final form $4179 million. Canada brought in 638,644,000,000,000 CAD in revenues that month and spent 653,833,000,000,000 CAD. The relative strength of the Canadian dollar versus the US dollar directly results from the distinct nature of Canadian exports and imports. Price drops have been consistent since June 2022, when they were 32.4%, with subsequent decreases to 17.6% in August 2022 and 7.5% in December 2022.

Canada: Commodity Prices
Date	% change YOY
Jan-22	30.6
Feb-22	30.3
Mar-22	42.6
Apr-22	38.3
May-22	37.6
Jun-22	32.4
Jul-22	19.1
Aug-22	17.3
Sep-22	12.7
Oct-22	8.6
Nov-22	7.9
Dec-22	7.5

India exported goods to Canada worth C$81.91 billion in total. Indian exports to Canada were only $45.02 billion in value. In India, imports far exceed exports. The rupee's fall causes inflation and higher prices.

India: Commodity Prices
Date	Base Points change YOY)
Jan-22	165.7
Feb-22	166.1
Mar-22	167.7
Apr-22	170.1
May-22	171.7
Jun-22	172.6
Jul-22	173.4
Aug-22	174.3
Sep-22	175.3
Oct-22	176.7
Nov-22	176.5
Dec-22	175.7

If inflation is present, then prices must be changed. Inflation in the cost of goods was 174.3 percentage points higher from August 2022 to December 2022. (175.7 basis points). When compared to the US and Canadian dollars, the Indian rupee is significantly weaker.

3. Interest rates

To most Canadians, prices will continue to rise. In addition, they estimate that reviving the economy will add to the budgetary burden. It was forecasted that the global economy would expand by 3.5% in 2022, 2% in 2023, and 3% in 2024. The Bank of Canada has taken the following actions to help Canadians weather the current economic storm.

Consider the interest rate increase of 100 basis points that just occurred. The central bank thinks that, in the long run, people, businesses, and consumers will benefit from higher inflation rates. They predict it will peak at just 2% in 2024. Because of rising inflation, interest rates will increase dramatically in March of 2023. The rate increased by 0.75 percentage points, from 2.5% in June and August 2022 to 4.25 percent in November 2022.

Canada: Interest Rates
Date	Rate (%)
Aug-21	0.2
Sep-21	0.2
Oct-21	0.2
Nov-21	0.2
Dec-21	0.1
Jan-22	0.15
Feb-22	0.2
Mar-22	0.45
Apr-22	0.95
May-22	0.95
Jun-22	1.5
Jul-22	2.5
Aug-22	2.5
Sep-22	3.25
Oct-22	3.75
Nov-22	4.25

Since this was the case, the Reserve Bank of India made similar moves. Fifty basis points increased rates by the Reserve Bank of India, India's central bank. In July and August of 2018, interest rates were 5.4%, up from 4.9% in July to 4.9% in August 2022. Eventually, in December of 2022.2, interest rates would reach 6.5%. By 2024, the government of India hopes to have inflation down to 3% or less.

India: RBI Interest Rates
Date	Rate (%)
Jun-19	5.75
Aug-19	5.40
Oct-19	5.15
Mar-20	4.40
May-20	4.00
May-22	4.40
Jun-22	4.90
Jul-22	5.40
Aug-22	5.40
Sep-22	6.15
Dec-22	6.50

The public and private sectors have both increased the number of roadblocks one must overcome on the way to financial independence, making it more difficult to acquire funds. Interest rates react instantly to changes in inflation and inflation expectations. As the cost of living increases, consumers have less buying power.

4. Inflation rates

The inflation rate is a convenient surrogate for the durability and buying power of money. As the cost of living increases, consumers have less buying power. Almost every economy is struggling with inflation right now. Some countries will be hit very hard, while others will be unaffected.

In addition, Canada's inflation rate has risen dramatically. In just one year, prices went up by five percent. Canada was not immune to the global coronavirus pandemic. It became apparent that government regulations were preventing factories from expanding as inflation rates rose. After the Bank of Canada increased repo rates in June 2022 to combat inflation, consumer prices in Canada fell from 8.1% in June 2022 to 7.6% in July 2022 and 6.3% in December 2022. The Canadian economy has been booming as inflation has been decreasing.

Canada: Inflation Rates
Date	Rate (%)
Jan-22	5.1
Feb-22	5.7
Mar-22	6.7
Apr-22	6.8
May-22	7.7
Jun-22	8.1
Jul-22	7.6
Aug-22	7
Sep-22	6.9
Oct-22	6.9
Nov-22	6.8
Dec-22	6.3

There has been a steady rise in the cost of living in India since September 2021. Even though growth and prices seemed to have stabilized early in 2022, the months of March, April, and May saw unprecedented spikes. After climbing steadily from July through September of 2023, the inflation rate peaked in January at 6.52%.

India: Inflation Rates
Date	Rate (%)
Jan-22	6.01
Feb-22	6.07
Mar-22	6.95
Apr-22	7.79
May-22	7.04
Jun-22	7.01
Jul-22	6.71
Aug-22	7.00
Sep-22	7.41
Oct-22	6.77
Nov-22	5.88
Dec-22	5.72
Jan-23	6.52

A growing sense of inflationary pressure is problematic. Since the Indian rupee is in such disrepair, the Reserve Bank of India (RBI) and the government of India have no recourse but to raise prices.

5. Unemployment rate and Job Availability

The unemployment rate and the labor force participation rate both have an impact on a country's currency value. The economy improves as more people enter the labor force and businesses increase their staffing levels. Canadian unemployment dropped 4.9% in June 2022 from 5.1% in May. The previous rate of 4% will increase to 5.4% as of August 2022. Even though the unemployment rate decreased from 0.2% to 0.1% between October and December, more job openings are still needed. It applies to the modern labor market and is ready for use. Since February 2022, a plethora of brand-new job openings has become available. However, things have been deteriorating for some time. As the number of people actively participating in the labor force grows and their purchasing power rises, domestic investment and inflation both decline. People's willingness to save money has increased, which has led to better economic times.

Canada: Unemployment Rate
Date	Rate (%)
Mar-22	5.3
Apr-22	5.2
May-22	5.1
Jun-22	4.9
Jul-22	4.9
Aug-22	5.4
Sep-22	5.2
Oct-22	5.2
Nov-22	5.1
Dec-22	5

Unemployment in India rose from 6.8% in July 2022 to 8.2% in August of that year. Despite this, experts are confident that the unemployment rate will have dropped significantly to 6.4% by September 2022. By comparison, it was 8.3 percent in December of 2022. Consumers are tightening their wallets due to worries about the economy. This trend is indicative of a decline in foreign investment in the country. A low unemployment rate in India can be attributed to the loosening of hiring policies by some multinational corporations

India: Unemployment Rate
Date	Rate (%)
Jan-22	6.56
Feb-22	8.11
Mar-22	7.57
Apr-22	7.83
May-22	7.12
Jun-22	7.8
Jul-22	6.8
Aug-22	8.2
Sep-22	6.4
Oct-22	7.7
Nov-22	8
Dec-22	8.3

6. Budget deficit and national debt levels

Except for a few outliers, every country in the world has zero debt. There's no arguing with the importance of these costs, but rising debt levels lead to inflation and a decline in currency value. When actual expenditures exceed budgeted levels and inflation erodes the purchasing power of money, the government proposes a budget for the following fiscal year.

Canada's spending in the first three months of this year was $3.91 billion lower than budgeted. Their external debt decreased by $ 59 million from Q4 2021 to Q1 2022, going from $ 2.59 billion to $ 2.49 billion. The result has been an appreciation in the value of the Canadian dollar. The following graph shows that Canada's exports have consistently outpaced its imports over time. In December 2021, the gap between imports and exports was eliminated. The country will have a positive delta until 2022. In July, the shortfall was CAD 2,372.7M, and as of November 2022, a total of CAD 40M in debt was due. The success of the Canadian dollar is reflected in the health of the Canadian economy.

Canada: Balance of Trade
Date	CAD $ Millions
Feb-22	2836.8
Mar-22	2006.9
Apr-22	1941.5
May-22	4768.9
Jun-22	5046.3
Jul-22	2372.7
Aug-22	-2535
Sep-22	8675
Oct-22	4987
Nov-22	-2187
Dec-22	-1595

India's national budget, however, is always unveiled in February. The first three months of 2022 saw overspending of USD 13.4 billion in India. By the end of the first quarter of 2022, India had accumulated USD 620 billion in total external debt. By 2021's close, it will be worth $614 billion. Since this is the case, the value of the rupee has decreased, and inflation has risen.

Additionally, it is suggested that the trade deficit be considered. The trade deficit in India has persisted throughout its history (income minus expenditures). In July and August of 2022, India was hit by a significant negative delta. In January 2023, Canada racked up a trade deficit of C$23.4 million.

India: Balance of Trade
Date	CAD$ Millions
Jan-22	11.32
Feb-22	11.24
Mar-22	15.66
Apr-22	11.53
May-22	11.35
Jun-22	12.85
Jul-22	41.47
Aug-22	38.68
Sep-22	19.33
Oct-22	20.7
Nov-22	15.3
Dec-22	31.8
Jan-23	23.4

7. Politics and international policies

The value of a country's currency can be seen as a barometer of its political stability. When people lose faith in their government, they are less likely to protest, and their currency loses value. Indians have become increasingly critical of their government for several reasons, including the country's religious diversity, high taxes, the instability of the country's political parties, etc. As a result, some parts of the country thrive while others do not. The fall in the value of the rupee can be traced back to the erratic pace of growth in India's economy.

Canada and India have been subjected to much unfavorable media attention. As a consequence, the value of both currencies has dropped. Compared to its Indian and American counterparts, the Canadian dollar has performed better.

Both currencies have done well even though they are highly unstable. While the Indian rupee has been weak, the Canadian dollar has been quite strong. These two coins don't match the dollar's value in circulation in the United States. In comparison to other currencies, the Canadian dollar has done quite well. Both governments would benefit from a steady currency, but even the most well-laid plans can be disrupted by the unexpected. The value of the rupee is predicted to continue dropping until the new year.