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

Key points:

• Canada Dollar to Indian Rupee Exchange Rate Increases.
• The Bank of Canada has raised interest rates.
• The Reserve Bank of India is expected to raise interest rates by another 25 basis points (bps) in 2023 from their current level of 6.5 percent.
• Both India's and Canada's inflation and unemployment rates have increased recently.

After years of steady appreciation, the Canadian dollar is now worth 60 Indian rupees as of April 30, 2023. There has been a lot of volatility in the value of one currency compared to another recently, with a high of 61.37 on May 8, 2023, and a low of 59.56 on May 1, 2023. The trend curve has a standard deviation of 0.292 rupees. The Canadian dollar is strengthening due to recent fluctuations in the exchange rate. Once priced at 5055 rupees, this product is now 60. Foreign capital imbalances and increases in the price and demand for petrol are two potential causes of overvaluation.

CAD to INR Exchange Rates (1 CAD into INR)
Date	Open	High	Low	Close
May 01, 2023	59.5585	59.5585	59.5585	60.3012
May 02, 2023	59.5585	60.4966	59.5585	59.5585
May 03, 2023	59.9831	60.1078	59.9008	59.9796
May 04, 2023	59.9442	60.1836	59.9441	59.9444
May 05, 2023	60.3648	60.8281	60.3397	60.3702
May 08, 2023	60.3579	61.37	60.3579	61.0458
May 09, 2023	61.1087	61.3558	61.094	61.1012
May 10, 2023	61.3276	61.3546	61.1732	61.3276
May 11, 2023	61.2146	61.2512	60.8203	61.2072
May 12, 2023	60.7787	60.9223	60.6309	60.7854
May 15, 2023	60.2178	60.9458	60.2178	60.5743

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's huge population means that this one supplier can meet about 80% of the country's annual demand for crude oil. Changes in the price of crude oil are a good barometer of the global economy's health. On May 1st, it cost 103.98 CAD, and on May 4th, 2023, it dropped to 86.75 CAD. The passage's overall structure could be more precise, but it might be promising. Reduced prices would help in all stages of the crude oil industry, from extraction to distribution to retail. By restricting the production of new notes, the Indian government could raise the value of the rupee.

Crude Oil (in CAD)
Date	High (CAD)	Low (CAD)	Close (CAD)
May 01, 2023	103.98	101.06	102.59
May 02, 2023	103.14	96.79	97.11
May 03, 2023	97.78	92.55	93.43
May 04, 2023	95.21	86.75	93.46
May 05, 2023	97.11	92.61	96.47
May 08, 2023	98.60	95.05	97.89
May 09, 2023	98.66	95.40	98.57
May 10, 2023	98.83	96.03	97.05
May 11, 2023	98.28	94.45	94.77
May 12, 2023	96.85	94.36	94.50
May 15, 2023	97.17	94.08	96.38

Like many other countries, Canada places a high premium on this item. In most cases, the profit from selling crude oil is greater than the production cost. By 2022, the market is expected to be even more successful. The price of a barrel of crude oil increased to $1,754,000 in the second quarter of 2022. This is a massive increase compared to the typical first-year output of $1–$1.5 billion. The value of the Canadian dollar may rise if the cost of imported crude oil increases.

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

2. Commodity Prices and Import/Export

Remember that the purchasing habits of people in both countries heavily influence the value of the Canadian dollar relative to the Indian rupee. This exchange rate is based on the relative economic strength of the two countries. Both countries, for instance, have historically imported a wide range of materials and components from abroad.

The Canadian energy market was worth $9.702 trillion in August 2022. Total value was $4,179,000,000, with chemicals at $153,000,000, plastics and rubber at $10,460,000,000.0, metal ores and concentrates at $100,000,000.0, and petroleum products at $4,179,000,000. Canada's exports that month were valued at 638,644,000,000,000 Canadian dollars, while imports totaled CAD 653,833,000,000,000. The Canadian dollar strengthened due to the wide gap between exports and imports. In addition, consumer goods prices have decreased every month since June 2022, going from 32.4% in June to 17.6% in August to 1.2% in January 2023.

Canada: Commodity Prices
Date	% change YOY
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	8.1
Nov-22	8.1
Dec-22	8.1
Jan-23	1.2
Feb-23	-5.2
Mar-23	-16.5

Canada's trade deficit with India was $45.02 billion, or a difference of C$81.91 billion in imports from India and only C$45.02 billion in exports to India. India imports many goods, so if the rupee's value drops, prices might go up.

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

Between August 2022 and April 2023, the consumer price index for goods rose by 178.1 percentage points, or 176.5 percent, on a scale of 100. The Indian rupee is significantly less intense than its U.S. and Canadian counterparts.

3. Interest rates

The majority of Canadians worry that revitalization efforts will break the bank. The world economy is expected to grow by 3.5% in 2022, 2% in 2023, and 3% in 2024. The Bank of Canada has implemented several measures to help Canadians weather the current economic storm.

Assuming higher inflation will benefit the economy, businesses, and consumers in the long run, the central bank recently increased the interest rate by 100 basis points. The bank predicts that 2024 inflation will have decreased to 2%. As a direct result of the inflation crisis, interest rates have jumped from 2.5% in June and August 2022 to 4.5% in January 2023, an increase of over 100%.

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

The Reserve Bank of India has increased interest rates in response to rising inflation. In July and August of this year, the interest rate increased by 50 basis points, reaching 5.4%. The 4.9% interest rate in July will remain in effect through August 2022. The Federal Reserve plans to raise interest rates to 6.5% by the decade's end. The Indian government's target for inflation by 2024 is 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

Funding is harder to come by now because of increased government and private sector regulation and scrutiny. Inflation and inflation expectations are significant factors that can affect interest rates. As the cost of living increases, consumers have less money for other purchases.

4. Inflation rates

Inflation is a significant issue for every economy because of its impact on consumer spending and currency value. When prices rise, consumers have less money to spend. While some countries may feel the effects of inflation more than others, no country is immune.

Canada has experienced one of the world's steepest price increases, at 5% annually. Canada was struck by the global spread of the COVID-19 pandemic due to the country's stringent regulatory environment. Consumer prices in Canada fell from 8.1% in June 2022 to 7.6% in July 2022 and 4.4% in April 2023 after the Bank of Canada raised repo rates to combat inflation. The recent decline in inflation has been beneficial to Canada's economy.

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

The cost of living in India has been rising steadily since September 2021. Growth and prices slowed at the beginning of 2022 but then surged during March, April, and May. Inflation hit its lowest point in April 2023, at 4.7% from July through September 2022.

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

The Reserve Bank of India (RBI) and the government of India have been forced to raise prices in response to the deteriorating value of the Indian rupee.

5. Unemployment rate and Job Availability

The value of a country's currency is significantly affected by the unemployment rate there. More people working and more businesses hiring is good for the economy. In April 2023, Canada's unemployment rate was 5%, down from 5.1% in November 2022. While the unemployment rate declined from October to December, more employment opportunities are needed. Since February 2022, many people have entered the labor force, resulting in a decline in domestic investment and inflation. However, as a result of increased savings, the economy has improved.

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

The unemployment rate in India rose from 6.8% in July (2022) to 8.2% in August (2022). The percentage is expected to drop to 6.4% by September 2022, though. As of March 2023, however, the unemployment rate stood at 7.8%. People are less willing to spend due to economic uncertainty, which has reduced the inflow of foreign currency. Despite this, India's unemployment rate is low thanks to the recruitment efforts of MNCs.

India: 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
Jun-22	4.9

6. Budget deficit and national debt levels

Most countries, with a few notable exceptions, have some form of outstanding debt. Excessive debt can adversely affect a country's currency value and inflation rate. When actual spending exceeds the planned levels, and inflation reduces the value of money, governments create a budget for the following fiscal year.

In contrast, Canada's external debt was reduced by $59 million between the fourth quarter of 2022 and the first quarter of 2023 because the country spent $3.91 billion less than expected during the first three months of 2022. The result has been a rise in the value of the Canadian dollar. Canada's exports have grown faster than imports, from July's surplus of CAD 2,372.7M to November 2022's projected surplus of CAD 40M. Thanks to the reliability of the Canadian dollar, the country's economy has been booming.

Canada: Balance of Trade
Date	CAD $ Millions
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
Jan-23	1204.1
Feb-23	422.3
Mar-23	972.5

According to India's national budget, released every year in February, it was spending increased by the government in the first quarter of 2022. India's external debt was USD 620 billion at the end of the first quarter, and it is expected to decrease to $614 billion by the end of 2021.

The depreciation of the Indian rupee and the subsequent increase in inflation can be partly attributed to this. India's persistent trade deficit needs to be taken into account. Compared to India's sizeable negative delta in July and August 2022, Canada's April 2023 trade deficit was only C$15.24 million.

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

7. Politics and international policies

A country's currency's value is an indicator of the health of its government because it reflects the people's trust in its leaders. Various criticisms of the Indian government have contributed to erratic economic growth and a weakening rupee. The media's negative portrayals of Canada and India have hurt both countries economies.

The Canadian dollar has fared better than the Indian and US rupee. Both currencies have been through wild price swings but have come out on top. The Canadian dollar has risen in value while the Indian rupee has fallen. A stable currency would benefit both countries' governments, but even the best-laid plans can only succeed if something unexpected comes up. The rupee's worth is predicted to remain unchanged throughout the year.