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

Key points:

• Canada Dollar to Indian Rupee Exchange Rate increases.
• The Bank of Canada has recently announced a hike in interest rates.
• Our financial projections indicate that there will be a 25 basis point increase in interest rates in India by 2023, bringing the current rate of 6.5 percent up to the projected level.
• Both India and Canada have experienced a recent increase in inflation and unemployment rates.

As of June 15, 2023, the Canadian dollar has appreciated against the Indian rupee, with an exchange rate of 1 CAD to 60 INR. This appreciation can be attributed to the consistent growth in the value of the Canadian dollar over the years. During the first half of June 2023, there was significant volatility in the exchange rate between the two currencies, fluctuating between a peak of 61.9 and a trough of 60.65. The calculated value for the standard deviation of the trend curve is 0.135 rupees. The appreciation of the Canadian dollar has been observed in light of recent fluctuations in the exchange rate. There has been a significant reduction in the cost of the product from 5055 rupees to 60 rupees. Overvaluation of assets could arise due to trade deficits or sudden surges in demand and pricing for petroleum products.

CAD to INR Exchange Rates (1 CAD into INR)
Date	Open	High	Low	Close
Jun 01, 2023	60.882	61.1917	60.6517	60.8811
Jun 02, 2023	61.1544	61.365	61.1236	61.1334
Jun 05, 2023	60.9817	61.4871	60.9817	61.3165
Jun 06, 2023	61.3	61.6236	61.2919	61.2944
Jun 07, 2023	61.5281	61.8343	61.4228	61.5208
Jun 08, 2023	61.7445	61.8517	61.5926	61.7333
Jun 09, 2023	61.6971	61.8741	61.6099	61.7008
Jun 12, 2023	61.1947	61.8622	61.1947	61.7439
Jun 13, 2023	61.618	61.8201	61.5468	61.6133
Jun 14, 2023	61.7056	61.8448	61.5616	61.7094
Jun 15, 2023	61.5074	61.9197	61.4408	61.5053

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

As a result of the significant populace of the nation, this sole supplier can fulfill roughly 80% of India's yearly requirement for unrefined petroleum. The fluctuations in the price of crude oil serve as a reliable barometer of the overall health of the global economy. On June 5, 2023, the security was valued at 102.23 CAD, which declined to 89.35 CAD on June 12, 2023. The passage exhibits potential for enhancement in its overall composition. Lower crude oil prices would positively impact all segments of the industry, including extraction, distribution, and retail. One potential strategy for bolstering the value of the Indian rupee would involve implementing measures to curtail the production of new banknotes.

Crude Oil (in CAD)
Date	High (CAD)	Low (CAD)	Close (CAD)
Jun 01, 2023	96.36	91.54	95.05
Jun 02, 2023	97.80	94.86	97.22
Jun 05, 2023	102.23	97.70	98.27
Jun 06, 2023	98.60	95.60	97.80
Jun 07, 2023	98.97	96.03	98.08
Jun 08, 2023	98.05	92.36	95.39
Jun 09, 2023	95.97	93.74	93.83
Jun 12, 2023	94.07	89.35	89.77
Jun 13, 2023	93.38	89.79	92.83
Jun 14, 2023	95.11	91.85	92.12
Jun 15, 2023	96.18	92.13	95.72

This particular asset exhibits significant value within the Canadian market and other global markets. The sale of crude oil generally generates a higher profit margin than its production cost. Our analysis shows that the market will experience significant growth and increased profitability by 2023. During Q2 2022, there was a substantial increase in the market value of crude oil, with prices reaching $1,754,000 per barrel. The observed surge is noteworthy in contrast to the mean inaugural annual yield ranging from $1 to $1.5 billion. A potential appreciation of the Canadian dollar may result from a rise in imported crude oil costs.

However, the value of the Indian rupee will continue to decline in the Canadian and US dollars.

2. Commodity Prices and Import/Export

The exchange rate between the Canadian dollar and the Indian rupee is subject to significant fluctuations based on consumer preferences in both countries. The exchange rate was determined based on the relative economic strength of both nations. Both countries have a historical dependence on importing diverse materials and components.

As of August 2022, the Canadian energy market has been assessed to have a valuation of $9.702 trillion. The chemical sector yielded a total revenue of $153 million, while the plastics and rubber industry generated an income of $10.46 billion. The metal ores and concentrates sector contributed $100 million to the overall revenue, and the petroleum products industry accounted for a significant gain of $4.179 billion. In the reported month, Canadian exports were valued at 638,644,000,000,000 CAD, whereas Canadian imports were valued at 653,833,000,000,000 CAD. The favorable balance of trade resulted in a strengthening of the Canadian currency. Since June 2022, there has been a consistent downward trend in consumer goods prices, with a cumulative decrease of 32.4% in June, 17.6% in August, and 1.2% in January 2023.

Canada: Commodity Prices
Date	% change YOY
May-22	37.6
Jun-22	32.4
Jul-22	19.1
Aug-22	17.3
Sep-22	12.7
Oct-22	8.1
Nov-22	8.1
Dec-22	8.1
Jan-23	1.2
Feb-23	-5.2
Mar-23	-16.5
Apr-23	-10.8

In 2017, Canada experienced a trade deficit of $81.91 billion with India, indicating that its imports from India exceeded its exports to the country by $45.02 billion. The potential depreciation of the Indian rupee may increase prices due to the country's significant reliance on imported goods.

India: Commodity Prices
Date	Base Points change YOY)
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
Jan-23	176.5
Feb-23	176.8
Mar-23	177.2
Apr-23	178.1
May-23	179

The Consumer Price Index (CPI) for goods experienced a significant increase of 179 percentage points, or 176.5 percent, during the period spanning from August 2022 to May 2023. The Indian rupee exhibits a significant depreciation compared to the Canadian and American dollars.

3. Interest rates

A significant proportion of the Canadian population is apprehensive that the ongoing revitalization initiatives may harm their financial resources. Based on current projections, it is anticipated that the global economy will experience a growth rate of 3.5% in 2022, a growth rate of 2.5% in 2023, and a subsequent growth rate of 3% in 2024. The Bank of Canada has implemented a series of measures to mitigate the ongoing economic turmoil in Canada.

The recent decision by the central bank to raise the interest rate by 100 basis points is based on the assumption that a higher inflation rate will have long-term benefits for the economy, businesses, and consumers. Based on the central bank's projections, the inflation rate is anticipated to decrease to 2% by 2024. The interest rates have experienced a significant surge of more than 100% from their previous low point in June and August of 2022, which stood at 2.5%, to their present level in January of 2023, which is 4.5%. This increase can be attributed to the ongoing inflation crisis.

Canada: Interest Rates
Date	Rate (%)
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
Dec-22	4.5
Jan-23	4.5

Due to the inflationary pressures in India, the Reserve Bank of India has decided to increase the interest rates. The annual percentage rate experienced an increase of 50 basis points during July and August, resulting in a current rate of 5.4%. The interest rate of 4.9%, which was effective in July, will be sustained until August 2022. Based on the Federal Reserve's projections, interest rates are expected to increase to 6.5% by the end of the decade. The Indian government aims to achieve a maximum inflation rate of 3% by 2024.

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 current financial landscape challenges securing funding due to heightened regulatory and private sector oversight. The volatility of interest rates is subject to fluctuations in various economic indicators, such as inflation and market expectations. As the cost of living increases, consumers' disposable income decreases.

4. Inflation rates

Inflation poses a significant challenge to all economies due to its impact on consumer spending patterns and currency valuation. Rising costs lead to a reduction in disposable income for individuals. The differential effects of inflation across nations are a well-established phenomenon. However, it is pertinent to note that no country is entirely immune to its effects.

The annual inflation rate in Canada is currently at 5%, which is among the highest globally. Despite the rigorous regulatory framework in Canada, the COVID-19 pandemic has significantly impacted the nation's economy. Following the Bank of Canada's decision to raise repo rates in June 2022 to combat inflation, consumer prices in Canada experienced a decline from 8.1% in June 2022 to 7.6% in July 2022. Further, they decreased to 4.4% by April 2023. The Canadian economy has experienced a positive impact from the reduced inflation observed in recent months.

Canada: Inflation Rates
Date	Rate (%)
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
Jan-23	5.9
Feb-23	5.2
Mar-23	4.3
Apr-23	4.4

India's inflation rate has steadily increased since September 2021, resulting in a rising cost of living. Following a sluggish beginning to 2022, there was a significant surge in economic expansion and inflation during March, April, and May. During Q3 2022, inflation experienced an average increase of 4.7%. However, by May 2023, it reached an all-time low of 4.25%.

India: Inflation Rates
Date	Rate (%)
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
Feb-23	6.44
Mar-23	5.66
Apr-23	4.70
May-23	4.25

The declining value of the Indian rupee has prompted the Reserve Bank of India (RBI) and the government of India to increase prices.

5. Unemployment rate and Job Availability

Unemployment rates notably influence the currency's purchasing power of a nation. An increase in employment rates and business expansion through new hires can positively impact the overall economy. The unemployment rate in Canada experienced a decline from 5.1% in November 2022 to 5% in April 2023. While there was a decline in the unemployment rate from October to December, there remains room for improvement as further reductions are necessary. Additionally, there is a need for increased job creation to address the current employment landscape. The labor force participation rate increase since February 2022 has resulted in a decline in domestic investment and inflation. The increase in savings rate has contributed to the overall improvement in the economy.

Canada: Unemployment Rate
Date	Rate (%)
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
Jan-23	5
Feb-23	5
Mar-23	5
Apr-23	5

India's unemployment rate experienced a significant increase in August 2022, rising from 6.8% in the previous month to 8.2%. Based on our projections, it is anticipated that the figure above will experience a decline and reach 6.4% by September 2022. As of March 2023, the unemployment rate stood at 7.8%. The current economic climate has resulted in a decrease in consumer confidence, reducing significant expenditures and, subsequently, decelerating the influx of foreign currency. The recruitment endeavors of multinational corporations (MNCs) have effectively maintained a low unemployment rate in India.

India: Unemployment Rate
Date	Rate (%)
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
Jan-23	7.1
Feb-23	7.5
Mar-23	7.8

6. Budget deficit and national debt levels

With few exceptions, governments have incurred debt. Excessive debt levels in a nation may lead to a depreciation in its currency value and an increase in its inflation rate. In response to actual spending surpassing planned levels and the impact of inflation on currency value, governments devise a budget for the upcoming fiscal year.

Canada's Q1 2022 expenditures were $3.91 billion lower than anticipated, leading to a $59 million decrease in the nation's external debt from Q4 2022 to Q1 2023. Consequently, the appreciation of the Canadian dollar has occurred. It is anticipated that Canada's trade surplus will experience a contraction from CAD 2,372.7M in July to CAD 40M by November 2022 due to a more rapid increase in exports relative to imports. The robustness of the Canadian dollar has been a critical driver of the flourishing Canadian economy.

Canada: Balance of Trade
Date	CAD $ Millions
Jun-22	5046.3
Jul-22	2372.7
Aug-22	-2535
Sep-22	8675
Oct-22	4987
Nov-22	-2187
Dec-22	-1595
Jan-23	1204.1
Feb-23	422.3
Mar-23	230
Apr-23	1940

According to India's recently published national budget, the expenditure in the first quarter of 2022 has increased. India's external debt stood at USD 620 billion at the close of Q1, with a projected decline to USD 614 billion by year-end.

The depreciation of the Indian rupee could have potentially impacted the inflationary pressures in the economy. The persistent trade deficit of India warrants attention from a financial perspective. In May 2023, Canada's trade deficit amounted to a relatively modest C$22.12 million, which starkly contrasts India's substantial negative delta observed in July and August 2022.

India: Balance of Trade
Date	CAD$ Millions
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
Feb-23	17.43
Mar-23	19.7
Apr-23	15.24
May-23	22.12

7. Politics and international policies

The currency valuation of a nation is closely tied to the level of public trust in its governing institutions. The Indian economy has been experiencing lackluster growth, and the rupee has been depreciating due to various grievances directed toward the government. The economic performance of Canada and India has been adversely impacted by unfavorable media coverage.

The Canadian dollar has exhibited a relatively stronger performance when juxtaposed with the Indian and American rupees. The currencies in question have shown significant fluctuations in value but have ultimately demonstrated resilience. The Indian rupee has experienced a decline in value, whereas the Canadian dollar has been offered an upward trend. The fiscal authorities of both nations stand to gain from a currency that exhibits stability. However, it is essential to note that despite meticulous planning, the process is only guaranteed to unfold sometimes. Based on current market trends, the rupee's value will be expected to maintain a steady position over the year.