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

Key points:

• Canada Dollar to Indian Rupee Exchange Rate decreases.
• The Canadian asset, mainly crude oil, holds intrinsic value globally.
• Exchange rates exhibited volatility in November 2023, with notable fluctuations in CAD to INR rates.
• Changes in unemployment rates influence currency strength.
• Trade balances and external debt levels contribute to the economic landscape.
• Inflation rates in Canada and India affect currency values.

As of November 1, 2023, an examination of financial data reveals a discernible and positive trend in the valuation of the Canadian dollar against the Indian rupee. The existing exchange rate of 1 Canadian Dollar (CAD) to 60 Indian Rupees (INR) underscores this upward trajectory, indicating the consistent and favorable performance of the Canadian dollar over time.

However, at the beginning of November 2023, the exchange rate between these currencies exhibited notable volatility, ranging from a high of 60.7 INR on November 07, 2023, to a low of 59.6 INR on November 13, 2023. Between November 1, 2023, and November 15, 2023, there was a change of 0.933%. The calculated average during this period is 60.31. The value of INR against the CAD started increasing from November 1, 2023, and from November 10, 2023, it experienced a decline, only to rise again from November 14, 2023. This fluctuation indicates changing market dynamics and sentiment. A comprehensive analysis of this currency pair also reveals a computed standard deviation of the trend curve, amounting to 0.342 rupees. This standard deviation signifies the degree of variability or volatility in the exchange rate, with a higher value suggesting more significant price swings. As of November 15, 2023, the market closed at 60.52 INR against the CAD.

It is crucial to note that the recent appreciation of the Canadian dollar is a significant development, particularly in response to recent fluctuations in the exchange rate. The Canadian dollar has strengthened considerably, moving from 65 to 60 rupees. Such a substantial shift can impact various economic factors and trade dynamics.

One potential explanation for this asset appreciation could be trade imbalances or sudden surges in demand and pricing for essential commodities like petroleum products. A trade deficit or a significant increase in the market and pricing of such products can influence a country's currency exchange rate. Therefore, international trade and finance stakeholders must closely monitor these trends and consider the potential impact on their financial strategies and decisions.

CAD to INR Exchange Rates (1 CAD into INR)
Date	Open	High	Low	Close
01-Nov-23	59.9609	60.0869	59.8917	59.9609
02-Nov-23	60.124	60.387	60.0503	60.1153
03-Nov-23	60.494	60.8352	60.4436	60.4998
06-Nov-23	59.7787	60.9899	59.7787	60.846
07-Nov-23	60.7004	60.7105	60.3718	60.7005
08-Nov-23	60.3902	60.4481	60.2388	60.4002
09-Nov-23	60.293	60.5273	60.2626	60.2923
10-Nov-23	60.2418	60.499	60.0743	60.2279
13-Nov-23	59.6292	60.3469	59.6292	59.6292
14-Nov-23	60.0772	60.4732	60.06	60.2126
15-Nov-23	60.5279	60.829	60.4691	60.5279

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

Given India's substantial population, it is crucial to emphasize that a specific supplier can satisfy approximately 80% of the country's annual crude oil demand. The ability of this supplier to meet a significant portion of India's crude oil requirements underscores its essential role in ensuring the nation's energy security and economic stability.

The volatility in price fluctuations within the global oil market is a reliable indicator of the overall health and stability of the global economy. These fluctuations are not mere numbers on a chart; they mirror broader economic conditions and can have widespread consequences.

Notably, the highest rate of crude oil occurred on November 1, 2023, at 82.46 CAD, whereas the lowest rate was recorded on November 8, 2023, at 75.33 CAD. Post-November 8, 2023, there was a subsequent increase. The observed change from November 8, 2023, to November 15, 2023, is 1.750%, with a calculated standard deviation of 2.32. This decline in value suggests the potential for improvement in its structural composition and underlying substance. Understanding the contributing factors to such reductions is crucial for investors and policymakers.

Moreover, the anticipated decline in crude oil prices is expected to foster a favorable environment for various sectors within the industry, including extraction, distribution, and retail. Lower oil prices stimulate economic activity and benefit businesses relying on petroleum products. One potential strategy to bolster the valuation of the Indian rupee could involve implementing measures to control the production of new banknotes. This approach effectively addresses inflation and currency devaluation issues by managing the money supply. It is essential for maintaining a nation's currency stability and purchasing power. In summary, these dynamics in the oil market and currency valuation hold significant implications for India's economy and the global economic landscape, making them subjects of critical interest and analysis.

Crude Oil (in CAD)
Date	Open	High	Low	Close
01-Nov-23	80.82	82.83	80.22	82.46
02-Nov-23	82.58	83.6	80.1	80.51
06-Nov-23	81.13	82.24	80.66	80.82
07-Nov-23	80.93	81.05	77.09	77.37
08-Nov-23	77.12	77.53	74.91	75.33
09-Nov-23	75.65	77.16	75.21	75.74
10-Nov-23	75.59	77.73	75.31	77.17
13-Nov-23	77.15	78.64	76.21	78.26
14-Nov-23	78.53	79.77	77.79	78.26
15-Nov-23	78.17	78.77	76.31	76.66

This specific asset possesses substantial intrinsic value within Canadian markets and globally. Notably, the profitability derived from crude oil sales typically surpasses the corresponding production expenses, indicating a robust and often lucrative economic environment within the crude oil industry.

Our comprehensive analysis of market conditions indicates an imminent period of significant growth, with expectations of a noteworthy profitability increase by 2023. A pivotal reference point is the second quarter of 2022, marked by a substantial upswing in the market value of crude oil, resulting in an impressive price surge to $1,754,000 per barrel. This surge represents a remarkable deviation from the mean initial annual yield, generally within the $1 to $1.5 billion range.

The outlook for the Canadian dollar is promising, driven primarily by increased expenditures on imported crude oil. The rising demand for crude oil, particularly in countries like Canada that heavily rely on imports, has the potential to exert upward pressure on the valuation of the Canadian dollar compared to other currencies.

Conversely, the Indian rupee is expected to maintain a downward trajectory against the Canadian and US dollars. This anticipation can be attributed to various factors, including economic dynamics, trade imbalances, and shifts in global market conditions. Monitoring these currency movements and understanding their underlying causes is imperative for businesses and investors operating in these markets to make well-informed financial decisions.

2. Commodity Prices and Import/Export

Consumer preferences substantially impact the ever-changing dynamics of the exchange rate between the Canadian dollar and the Indian rupee, particularly within the economic landscapes of Canada and India. This intricate relationship between consumer choices and exchange rates leads to noteworthy currency value fluctuations when comparing these two nations. The determination of exchange rates is fundamentally grounded in a comprehensive evaluation of the relative economic strength and performance exhibited by both countries.

What further complicates this exchange rate dynamic is that both Canada and India significantly rely on importing a diverse array of materials and components. This reliance underscores a considerable degree of interdependence on external sources to sustain their respective supply chains. In essence, the exchange rate fluctuations are closely linked to the intricacies of consumer behavior and preferences in these countries, impacting their trade relationships and the broader economic landscape.

As of the most recent assessment in August 2022, the Canadian energy market boasts an impressive valuation of $9.702 trillion. The chemical sector reported a moderate performance with consolidated revenue of $153 million, while the plastics and rubber industry demonstrated a robust financial outcome with an income of $10.46 billion. The metal ores and concentrates segment contributed a noteworthy $100 million to the total revenue, and the petroleum products industry displayed substantial growth with an increase of $4.179 billion.

During this specific period, Canadian exports were valued at 638.644 trillion CAD, slightly lower than Canadian imports, which stood at 653.833 trillion CAD. The Canadian currency appreciated significantly, primarily due to the exceptional trade surplus. Notably, from November 2022 onwards, there has been a persistent decline in consumer goods prices. However, there was a 3.4% increase in December 2022. In contrast, consumer goods prices decreased in January 2023 by 1.8%. From January 2023 to September 2023, there was a significant change of 33.3%, with a calculated standard deviation of 9.8.

Canada: Commodity Prices
Date	% change YOY
Nov-22	8.6
Dec-22	8.9
Jan-23	1.8
Feb-23	-4
Mar-23	-14.9
Apr-23	-11.2
May-23	-18.2
Jun-23	-20.2
Jul-23	-10.9
Aug-23	-4
Sep-23	2.4
Oct-23	-0.8

In the fiscal year 2017, Canada faced a significant trade imbalance with India, where the trade deficit amounted to $81.91 billion. This marked a substantial gap between the value of imports from India and the importance of exports to the country. As a result, imports exceeded exports by $45.02 billion. The possibility of a devaluation of the Indian rupee could lead to increased price pressures, primarily due to India's significant reliance on imported goods.

India: Commodity Prices
Date	Base Points change YOY)
Nov-22	5.85
Dec-22	5.02
Jan-23	4.8
Feb-23	3.85
Mar-23	1.34
Apr-23	-0.79
May-23	-3.48
Jun-23	-4.18
Jul-23	-1.23
Aug-23	-0.52
Sep-23	-0.26
Oct-23	-0.52

During the observed period from November 2022 to October 2023, there was a notable decrease in the Consumer Price Index (CPI) for goods. The highest observed rate occurred in November 2022 at 5.85%, representing a change of 125.4% from November 2022 to March 2023. Subsequently, from April 2023 to October 2023, there was a discernible decline in the rates. The calculated average for this period is 0.823, with a median of -0.39. Additionally, the Indian rupee experienced a significant devaluation against both the Canadian and American dollars.

3. Interest rates

A substantial segment of the Canadian population expresses apprehensions regarding how current initiatives to rejuvenate the economy might impact their financial investments. Following a thorough analysis of the latest forecasts, there is an anticipation of a 3.5% growth in the global economy in 2022. The projected trajectory indicates a subsequent growth rate of 2.5% in 2023, followed by another increase of 3% in 2024. The Bank of Canada has strategically implemented comprehensive measures to address ongoing economic challenges within Canada. The recent decision by the central bank to increase interest rates by 100 basis points is motivated by their expectation that a higher inflation rate will positively impact the overall economy, businesses, and individual citizens in the foreseeable future. This decision is grounded in their forward-looking estimates and economic analysis. According to the central bank's projections, allowing inflation to rise to a certain extent can benefit various aspects of the economy. Increased economic activity stimulated by inflation can encourage spending and investment, creating opportunities for corporate entities and individuals.

The central bank foresees that, although inflation may be elevated, there will be a gradual decline in the inflation rate over time. Their objective is to guide it toward a target of around 2% by 2024. This 2% threshold is often seen as a healthy level of inflation that can promote economic stability and growth. By raising interest rates, the central bank aims to balance controlling inflation and ensure the economy remains robust and favorable for businesses and individuals in the coming years.

From the provided information, it is evident that interest rates peaked in November 2023 while they were at their lowest in December 2022. Furthermore, the interest rates remained consistent from February 2023 to May 2023. From July 2023 to October 2023, the rates remained almost constant. The median interest rate during this specific timeframe was 4.63%.

Canada: Interest Rates
Date	Rate (%)
Dec-22	4.5
Jan-23	4.5
Feb-23	4.51
Mar-23	4.5
Apr-23	4.5
May-23	4.5
Jun-23	4.75
Jul-23	5.01
Aug-23	5
Sep-23	5.01
Oct-23	5
Nov-23	5.04

Given the prevailing economic conditions marked by escalating inflationary pressures in India, it is wise for the Reserve Bank of India to respond strategically by increasing interest rates. In December 2023, the central bank took significant action by raising interest rates by 50 basis points, resulting in an annual rate of 5.72%. Notably, before this increase, interest rates had experienced a decline since January 2023, only to be reversed in July 2023.

The lowest observed interest rate occurred in May 2023, reaching 4.3%. This variation in interest rates reflects the Reserve Bank of India's efforts to balance maintaining economic stability and controlling inflation. The highest interest rate within this timeframe was 7.91% in July 2023. The calculated average during this period is 5.71. Looking ahead, the Federal Reserve has provided:

• Forward-looking estimates.
• Indicating an anticipated gradual upward trajectory in interest rates.
• Potentially peaking at 6.5% towards the end of the current decade.

Simultaneously, it's crucial to consider the ambitious goal set by the government of India to achieve a target inflation rate of 3% by 2024. This underscores broader economic objectives and policy measures in place to address inflation and uphold financial stability in the country. The actions taken by the Reserve Bank of India and the government's inflation target represent a coordinated effort to navigate the economic landscape amidst challenging inflationary conditions.

India: RBI Interest Rates
Date	Rate (%)
Dec-22	5.72
Jan-23	6.52
Feb-23	6.44
Mar-23	5.66
Apr-23	4.7
May-23	4.31
Jun-23	4.87
Jul-23	7.91
Aug-23	6.83
Sep-23	5.02
Oct-23	4.87

In today's economic landscape, obtaining funding has become more intricate due to stricter regulations and excellent supervision by private sector entities. The fluctuating nature of interest rates is closely linked to the shifts observed in various economic factors, such as inflation and market sentiment. Given the ongoing inflationary pressures, consumers face the challenge of gradually reducing their buying power, leading to a noticeable decrease in their available income.

4. Inflation rates

Inflation significantly challenges the global economy, impacting consumer spending patterns and currency values worldwide. The consistent price rise reduces individuals' disposable income, affecting their purchasing power. While inflation has been extensively studied, it's crucial to recognize that its consequences vary in each nation.

Canada is currently grappling with an annual inflation rate of 5%, one of the highest globally. This notable inflation is not solely due to economic dynamics but has been significantly influenced by the COVID-19 pandemic, profoundly shaping Canada's economic landscape. In response to inflationary pressures, the Bank of Canada wisely increased repo rates in June 2022 as a precautionary measure. The effects of this decision on consumer prices are evident, with the consumer price index dropping from 6.9% in October 2022 to 6.8% in November 2022.

Moreover, a significant 44.11% change in inflation rates from November 2022 to September 2023 indicates notable fluctuations. Notably, the lowest inflation rate occurred in June 2023, at 2.8%. The standard deviation, at 1.31, underscores the variability in inflation rates during this time.

Crucially, the Canadian economy has experienced a noteworthy upswing, primarily attributed to the positive effects of a significant decline in inflation over the past few months. These developments highlight the intricate interplay between economic policies, external factors like the pandemic, and the resilience of the Canadian regulatory framework in addressing economic challenges.

Canada: Inflation Rates
Date	Rate (%)
Nov-22	6.8
Dec-22	6.3
Jan-23	5.9
Feb-23	5.2
Mar-23	4.3
Apr-23	4.4
May-23	3.4
Jun-23	2.8
Jul-23	3.3
Aug-23	4
Sep-23	3.8

Since November 2022, the Indian economy has been consistently grappling with escalating inflationary pressures, leading to an overall increase in the cost of living. Despite a relatively lackluster start to the year, there was a noticeable improvement in both economic growth and inflation rates during January, February, and August.

Particularly noteworthy is the third quarter of 2023, which witnessed a significant and remarkable surge in inflation, marked by an average upward trajectory of 5.8%. However, a surprising turn occurred in May 2023, with the inflation rate experiencing a substantial decline, reaching an unprecedented milestone of 4.25%. However, from May 2023, the inflation rate rose again, reaching 7.4% in July 2023. Subsequently, from July 2023, inflation rates began to decline again, reaching the lowest point of 4.8% in October 2023. There is a noticeable change of 28.6% from August 2023 to October 2023.

India: Inflation Rates
Date	Rate (%)
Nov-22	5.88
Dec-22	5.72
Jan-23	6.52
Feb-23	6.44
Mar-23	5.66
Apr-23	4.7
May-23	4.25
Jun-23	4.87
Jul-23	7.4
Aug-23	6.83
Sep-23	5.02
Oct-23	4.87

The depreciation of the Indian rupee has necessitated the implementation of price hikes by the Reserve Bank of India (RBI) and the government of India.

5. Unemployment rate and Job Availability

Changes in unemployment rates can significantly influence a country's currency strength. It's good news for the economy when employment rates increase, and businesses use effective strategies to find talent. In Canada, the job market slightly increased unemployment, going from 5.2% in May 2023 to 5.7% in October 2023. The unemployment rate stayed the same from December 2022 to April 2023, but it went up in April 2023, showing a 3.8% change from December 2022 to May 2023. The standard deviation during this time was 0.262.

It's worth noting that there's still room for improvement, and more effort is needed to bring unemployment to better levels. Prioritizing initiatives to create more jobs is crucial for dealing with the current job situation. Since February 2022, there's been a considerable increase in the labor force participation rate, which has positively affected domestic investments and lowered inflation pressures. The significant rise in the savings rate has also played a crucial role in creating a positive trend for the broader economy.

Canada: Unemployment Rate
Date	Rate (%)
Dec-22	5
Jan-23	5
Feb-23	5
Mar-23	5
Apr-23	5
May-23	5.2
Jun-23	5.4
Jul-23	5.4
Aug-23	5.5
Sep-23	5.5
Oct-23	5.7

In December of 2022, the unemployment rate in India experienced a significant increase, showing a noticeable jump from the previous month's rate of 8% to 8.3%. Our comprehensive analysis leads us to project that this particular metric will gradually decline in the coming months, ultimately stabilizing at a convergence point of 7.1% by January 2023. As of April 2023, the unemployment rate was 8.1%, shedding light on the current dynamics within the labor market.

The change in the unemployment rate from November 2022 to December 2023, a span of 11.2%, is quite substantial and deserves attention. This change underscores the fluid nature of economic conditions in India during this period.

One of the contributing factors to this increase in unemployment is the general economic situation in the country. It has led to a decline in consumer sentiment, resulting in a significant reduction in consumer spending. This, in turn, has had a cascading effect on the inflow of foreign currency into the Indian economy. This decline in foreign currency inflow can adversely affect the country's overall economic stability.Interestingly, multinational corporations (MNCs) have played a vital role in maintaining India's relatively favorable unemployment rate. They have implemented strategic recruitment initiatives that have helped keep the unemployment rate in check. These initiatives have provided job opportunities to many and contributed to the overall stability of the labor market in India.

India: Unemployment Rate
Date	Rate (%)
Nov-22	8
Dec-22	8.3
Jan-23	7.1
Feb-23	7.5
Mar-23	7.8
Apr-23	8.1
May-23	7.7
Jun-23	8.5
Jul-23	7.9
Aug-23	8.1
Sep-23	7.1

In conclusion, the fluctuations in the unemployment rate in India between December 2022 and April 2023 highlight the complex interplay of economic factors, consumer sentiment, and strategic efforts by multinational corporations. The economy's performance in the coming months will likely be influenced by these and other variables, shaping the labor market dynamics in India.

6. Budget deficit and national debt levels

Governments, in general, have incurred debt, with only a few exceptions. Amassing significant debt levels within a nation can result in the devaluation of its currency, subsequently causing an uptick in inflation. This disparity between actual government spending and the initially projected levels, coupled with the impact of inflation on a country's currency value, underscores the need for strategic planning by government entities to formulate a comprehensive budget for the upcoming fiscal year.

In the first quarter of 2022, Canada's expenditures fell short of initial projections, leading to a deficit of $3.91 billion. This fiscal shortfall caused the nation's external debt to decrease by $59 million from the fourth quarter of 2022 to the first quarter of 2023. This reduction in external debt has contributed to a positive appreciation of the value of the Canadian dollar.

Upon conducting a thorough analysis of the situation, it is expected that Canada's trade surplus will see a significant decline, moving from CAD 2,372.7 million in July to an estimated CAD 40 million by November 2022. A noticeable dip in Canada's trade performance was observed starting in February 2023, though it gradually rebounded and reached CAD 1033 million in April 2023. The calculated average during this period is -231.77. This projected decrease can be attributed to exports' faster growth rate than imports.

The robust strength the Canadian dollar displays has played a pivotal role in propelling the prosperous Canadian economy forward.

Canada: Balance of Trade
Date	CAD $ Millions
Dec-22	1213.9
Jan-23	1301.1
Feb-23	-568.8
Mar-23	-39.2
Apr-23	1033.1
May-23	-2670.5
Jun-23	-4833
Jul-23	-510
Aug-23	717.6
Sep-23	2038.1

Upon examining India's recent national budget, it is evident that government spending has notably increased in the first quarter of 2022. By the end of this period, India's external debt reached USD 620 billion. Projections and economic trends indicate a slight decrease, stabilizing around USD 614 billion by the fiscal year's end.

The depreciation of the Indian rupee on the global market appears to be a contributing factor to the current inflationary pressures in the country. The persistent trade deficit in India requires a thorough financial evaluation. On the other hand, let's shift our focus to Canada's trade situation in December 2022. Canada faced a modest trade deficit of C$23.15 million during this period, showing a consistent trend with an average deficit of approximately -20.77.

However, India's trade performance in 2023 paints a different picture. A notable and concerning decline has been indicated by a substantial adverse change or delta in trade balances. This implies that India is encountering more significant challenges in its international trade activities, raising broader economic well-being and stability implications.

India: Balance of Trade
Date	CAD$ Millions
Nov-22	-22.06
Dec-22	-23.15
Jan-23	-16.45
Feb-23	-16.16
Mar-23	-18.12
Apr-23	-15.45
May-23	-22.02
Jun-23	-20.13
Jul-23	-20.67
Aug-23	-24.2
Sep-23	-19.37
Oct-23	-31.46

7. Politics and international policies

The connection between a nation's currency value and the confidence of its citizens in governing institutions holds significant importance. Currently, the Indian economy is grappling with sluggish growth and a devaluation of the Indian rupee, often attributed to grievances against the government. Negative media coverage has further contributed to Canada and India's economic challenges.

Notably, the Canadian dollar has demonstrated a robust performance compared to the Indian and American rupees. Despite considerable fluctuations, these currencies have shown resilience in overcoming challenges. While the Indian rupee has depreciated, the Canadian dollar has followed a positive and promising upward trajectory.

Canada's and India's fiscal authorities benefit from having a stable currency. However, it's crucial to acknowledge that executing this process precisely is sporadic, and market dynamics significantly influence the rupee's valuation. A thorough assessment of these dynamics suggests an expectation of persistent and stable growth in the rupee's value throughout the year.