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

Key points:

• Canada Dollar to Indian Rupee Exchange Rate decreases.
• The Bank of Canada has taken a strategic step in its monetary policy by implementing a rate hike, effectively raising current interest rates.
• After analyzing India's recent national budget, a noticeable increase in government expenditures during the first quarter of 2022 is evident.
• In contrast, let's look at Canada's trade situation in December 2022. Canada experienced a trade deficit of C$23.15 million during this period, indicating a relatively modest performance.

As of September 1, 2023, an examination of financial data reveals a clear and positive trend in the valuation of the Canadian dollar compared to the Indian rupee. The prevailing exchange rate, 1 Canadian Dollar (CAD) to 60 Indian Rupees (INR), underscores this upward trajectory. This apparent appreciation of the Canadian dollar can be attributed to its consistent and favorable performance over time.

During the start of September 2023, the exchange rate between these two currencies exhibited notable volatility, fluctuating between a high of 61.52 INR on September 15, 2023, and a low of 61.25 INR on September 6, 2023. From 1st September 2023 to 6th September 2023, we can notice a change of 1.66%. The average calculated during this period is 60.897. There is an increment of 0.327% from 1st September 2023 to 15th September 2023. The value of INR against the CAD started increasing from 1st September 2023, and from 6th September 2023, it started declining. This fluctuation is indicative of changing market dynamics and sentiment. Our comprehensive analysis of this currency pair also indicates that the computed standard deviation of the trend curve amounts to 0.328 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 September 15, 2023, the market closed at 61.394 INR against the CAD.

It is essential to note that the Canadian dollar's recent appreciation is a significant development, especially in response to the recent fluctuations in the exchange rate. The Canadian dollar has strengthened considerably, moving from 65 rupees to a remarkable 60 rupees. Such a substantial shift can affect various economic factors and trade dynamics.

One possible 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. As such, international trade and finance stakeholders must monitor these trends closely 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-Sep-23	61.1651	61.4522	61.1651	61.1651
04-Sep-23	61.0637	61.2668	61.0331	61.0743
05-Sep-23	61.0216	61.1314	60.9254	61.0371
06-Sep-23	60.164	61.0797	60.164	60.164
07-Sep-23	60.7073	60.9481	60.6203	60.7073
08-Sep-23	60.974	61.0147	60.7223	60.974
11-Sep-23	60.8723	60.9664	60.7555	60.8665
12-Sep-23	60.7992	60.9759	60.6504	60.7966
13-Sep-23	60.5931	60.885	60.5921	60.5931
14-Sep-23	61.1347	61.2351	60.7793	61.1275
15-Sep-23	61.3735	61.5224	61.2959	61.3659

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 the substantial size of India's population, it's important to highlight that a specific supplier can meet approximately 80% of India's annual crude oil demand. This supplier's capacity to fulfill a significant portion of India's crude oil requirements underscores its vital role in the nation's energy security and economic stability.

The volatile nature of price fluctuations in the global oil market is a reliable indicator of the overall health and stability of the global economy. These fluctuations in oil prices are not just numbers on a chart. They reflect broader economic conditions and can have far-reaching consequences.

It's worth noting that the security mentioned in this context has experienced a decline in its value, moving from 91.23 Canadian Dollars (CAD) on September 15, 2023, to 83.46 CAD on September 1, 2023. It can be noticed that there is a change of 6.63% from 1 September 2023 to 15 September 2023. The standard deviation calculated is 1.607. This decrease in value suggests room for improvement in its structural composition and underlying substance. Understanding the factors contributing to such declines is crucial for investors and policymakers alike.

Additionally, the anticipated decline in crude oil prices is expected to create a favorable environment for various sectors within the industry, including extraction, distribution, and retail. Lower oil prices can stimulate economic activity and benefit businesses that rely on petroleum products. One potential strategy to enhance the valuation of the Indian rupee could involve implementing measures aimed at controlling the production of new banknotes. This approach addresses inflation and currency devaluation issues by managing the money supply effectively. It's an essential consideration for maintaining a nation's currency's stability and purchasing power. In summary, these dynamics in the oil market and currency valuation have 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-Sep-23	83.63	86.06	83.46	85.55
05-Sep-23	86.06	88.07	85.02	86.69
06-Sep-23	86.72	88.08	85.93	87.54
07-Sep-23	87.54	87.74	86.39	86.87
08-Sep-23	86.78	87.95	86.15	87.51
11-Sep-23	87.4	88.15	86.71	87.29
12-Sep-23	87.27	89.37	87.22	88.84
13-Sep-23	88.75	89.64	88.29	88.52
14-Sep-23	88.81	90.79	88.68	90.16
15-Sep-23	90.67	91.23	89.22	90.77

This particular asset holds significant intrinsic value within Canadian markets and globally. It's important to note that the profitability associated with the sale of crude oil tends to exceed the corresponding production expenses. This favorable profit margin indicates that the industry surrounding crude oil is economically robust and often lucrative.

The Canadian dollar's outlook appears promising regarding appreciation, primarily due to increased expenditures on imported crude oil. As the demand for crude oil rises, especially in countries like Canada, which are significant importers, it can exert upward pressure on the Canadian dollar's valuation compared to other currencies.

Conversely, the Indian rupee is anticipated to sustain a downward trajectory against Canadian and US dollars. This could be attributed to various factors, including economic dynamics, trade imbalances, and changes in global market conditions. Monitoring these currency movements and their underlying causes is essential for businesses and investors operating in these markets to make informed financial decisions.

2. Commodity Prices and Import/Export

Consumer preferences exert a substantial impact on 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 fluctuations in the currency's value 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 the fact that both Canada and India exhibit a significant reliance 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 10.2.

Canada: Commodity Prices
Date	% change YOY
Nov-22	8.6
Dec-22	8.9
Jan-23	1.8
Feb-23	-4.0
Mar-23	-14.9
Apr-23	-11.2
May-23	-18.2
Jun-23	-20.2
Jul-23	-10.9
Aug-23	-4.0
Sep-23	2.4

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

In the period under observation, spanning from November 2022 to September 2023, there was a notable decline in the Consumer Price Index (CPI) for goods. Specifically, there was a substantial 25.3% change from November 2022 to January 2023, with the lowest point reaching -4.18%. The average value calculated for this timeframe is 0.945. Additionally, the Indian rupee underwent a significant devaluation against both the Canadian and American dollars.

3. Interest rates

A significant portion of the Canadian population is voicing concerns about how the current efforts to revitalize the economy might impact their financial investments. After thoroughly analyzing the latest predictions, the global economy is anticipated to grow by 3.5% in 2022. The forecasted path suggests a subsequent growth rate of 2.5% in 2023, followed by another increase of 3% in 2024. To deal with the ongoing economic challenges within Canada, the Bank of Canada has strategically implemented various comprehensive measures.

The central bank's recent decision to raise interest rates by 100 basis points is driven by their expectation that a higher inflation rate will positively affect the overall economy, businesses, and individual citizens in the foreseeable future. This move is based on their forward-looking estimates and economic analysis. According to the central bank's projections, allowing inflation to rise to a certain extent will benefit various aspects of the economy. Inflation can encourage spending and investment, as people and businesses may be more inclined to use their money rather than letting it lose value due to inflation. This increased economic activity can, in turn, stimulate economic growth and create opportunities for corporate entities and individuals alike.

The central bank's outlook is that although inflation may be elevated, they anticipate a gradual decline in the inflation rate over time. Their goal is to guide it toward a target of around 2% by 2024. This 2% threshold is often considered a healthy level of inflation that can promote economic stability and growth. By taking this step to raise interest rates, the central bank aims to strike a balance between controlling inflation and ensuring that the economy remains robust and favorable for businesses and individuals in the coming years.

Based on the provided information, it is evident that interest rates peaked in July 2023 while they were at their lowest in June 2022. Furthermore, the interest rates were consistent from February 2023 to April 2023. The median interest rate during this particular timeframe was determined to be 4.5%.

Canada: Interest Rates
Date	Rate (%)
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
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

Given the current economic conditions characterized by rising inflationary pressures in India, it is prudent for the Reserve Bank of India to take strategic action by increasing interest rates. In December 2023, the central bank indeed implemented a notable uptick in interest rates, raising them by 50 basis points. This decision resulted in an annual percentage rate of 5.72%. It's worth noting that before this increase, interest rates had experienced a decline since January 2023, only to be reversed in July 2023.

The lowest interest rate observed during this period was April 2023, reaching 4.7%. This fluctuation in interest rates reflects the Reserve Bank of India's efforts to balance economic stability and inflation control. Looking ahead, the Federal Reserve has provided forward-looking estimates indicating that interest rates are expected to undergo a gradual upward trajectory, with a potential peak of 6.5% as we approach the end of the current decade.

Meanwhile, it's essential to consider the government of India's ambitious goal of achieving a pinnacle inflation rate of 3% by 2024. This underscores the broader economic objectives and policy measures in place to address inflation and maintain financial stability in the country. The Reserve Bank of India's actions, along with the government's inflation target, are part of a coordinated effort to navigate the economic landscape in a challenging inflationary environment.

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

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 poses a substantial challenge to the global economy, with its far-reaching impacts on consumer spending patterns and the values of various currencies. The consistent upward trajectory of prices leads to a corresponding decrease in the disposable income available to individuals, affecting their purchasing power. The phenomenon of inflation, with its varying effects on different countries, has been extensively studied and scrutinized. However, it's crucial to recognize that the consequences of inflation are mitigated in each nation.

Canada, in particular, currently faces an annual inflation rate of 5%, among the highest rates in the world. This noteworthy inflation rate is not solely a result of economic dynamics but has been significantly influenced by the COVID-19 pandemic, which has had a profound impact on Canada's economic landscape. In response to the inflationary pressures, the Bank of Canada made a prudent decision to raise repo rates in June 2022 as a preemptive measure. The effects of this decision on consumer prices in the Canadian economy have been observable. For instance, the consumer price index significantly declined, dropping from 6.9% in October 2022 to 6.8% in November 2022. Additionally, there has been a substantial change of 51.8% from November 2022 to August 2023, indicating significant fluctuations in inflation rates during this period. Notably, the lowest inflation rate occurred in June 2023, at 2.8%. The standard deviation during this period, at 1.35, demonstrates the degree of variability in inflation rates over this time frame.

It's important to note that the Canadian economy has experienced a notable upswing, attributed mainly to the favorable effects stemming from a significant decline in inflation over the past few months. These developments reflect the complex interplay between economic policies, external factors such as 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

Since November 2022, the Indian economy has consistently grappled with increasing inflationary pressures, leading to a rising overall cost of living. Although the year began on a relatively lackluster note, there was a noticeable upswing in both economic growth and inflation rates during January, February, and August.

It is especially noteworthy to emphasize that in the third quarter of 2023, there was a significant and remarkable surge in inflation, characterized by an average upward trajectory of 5.8%. However, as of May 2023, the situation took an unexpected turn, with the inflation rate experiencing a substantial decline, reaching a milestone of 4.25% that had not been witnessed before.

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	4.70
May-23	4.25
Jun-23	4.87
Jul-23	7.40
Aug-23	6.83

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

The fluctuations in unemployment rates have a significant impact on a country's currency purchasing power. The upward trend in employment rates and the effective talent acquisition strategies adopted by businesses hold promising prospects for the overall economic situation. In Canada, the labor market saw a slight increase in the unemployment rate, rising from 5.2% in May 2023 to 5.5% in September 2023. The unemployment rate remained stable from December 2022 to April 2023, but there was an increase in April 2023, resulting in a 3.8% change from December 2022 to May 2023. It's important to recognize that there is still room for improvement, as further reductions are necessary to reach optimal levels. Additionally, prioritizing efforts to boost job creation is essential for effectively addressing the current employment landscape. Since February 2022, there has been a significant increase in the labor force participation rate, which has positively impacted domestic investment levels and reduced inflationary pressures. The substantial increase in the savings rate has played a crucial role in promoting a positive trend for the broader economy.

Canada: Unemployment Rate
Date	Rate (%)
Dec-22	5.0
Jan-23	5.0
Feb-23	5.0
Mar-23	5.0
Apr-23	5.0
May-23	5.2
Jun-23	5.4
Jul-23	5.4
Aug-23	5.5
Sep-23	5.5

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 have adverse effects on the overall economic stability of the country.Interestingly, multinational corporations (MNCs) have played a vital role in maintaining a relatively favorable unemployment rate in India. They have implemented strategic recruitment initiatives that have helped keep the unemployment rate in check. These initiatives have not only provided job opportunities to many but have also contributed to the overall stability of the labor market in India.

India: Unemployment Rate
Date	Rate (%)
Nov-22	8.0
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, for the most part, have incurred debt, with only a few notable exceptions. Accumulating substantial levels of debt within a nation can lead to the devaluation of its currency, subsequently causing an increase in inflation. This discrepancy between actual government expenditure and the initially projected levels, along with the impact of inflation on a country's currency value, necessitates a strategic approach for government entities to develop a comprehensive budget for the upcoming fiscal year.

During the first quarter of 2022, Canada's expenditures fell short of the initial projections, resulting in a deficit of $3.91 billion. Due to this fiscal shortfall, the nation's external debt decreased 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 comprehensive examination of the situation, it is anticipated that Canada's trade surplus will experience a significant decline, transitioning from CAD 2,372.7 million in July to an estimated CAD 40 million by November 2022. A noticeable decrease in Canada's trade performance was observed starting in February 2023, although it gradually began to rebound and reached CAD 1033 million in April 2023. The calculated average during this period is -310.8. This projected decrease can be attributed to the relatively faster growth rate of exports than imports.

The impressive strength exhibited by the Canadian dollar has played a pivotal role in driving the prosperous Canadian economy forward.

Canada: Balance of Trade
Date	CAD $ Millions
Oct-22	734.4
Nov-22	129.7
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	-4833.0
Jul-23	-437.2
Aug-23	717.6

After conducting a thorough analysis of India's recently revealed national budget, it becomes clear that there has been a noticeable increase in government expenditures during the first quarter of 2022. By the end of this initial quarter, India's external debt had risen to USD 620 billion. According to current forecasts and economic trends, this particular metric will undergo a slight decrease and then stabilize at around USD 614 billion by the end of the fiscal year.

The depreciation of the Indian rupee in the global exchange market may have played a significant role in driving the inflationary pressures currently affecting the country's economy. The ongoing trade deficit observed in India necessitates a comprehensive assessment from a financial perspective. In contrast, let's consider the trade situation in Canada in December 2022. Canada experienced a trade deficit of C$23.15 million during this period, indicating a relatively modest performance. The average trade deficit calculated during this time was approximately -19.7, demonstrating a consistent trend.

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

However, India's trade performance in 2023 tells a different story. There has been a significant and concerning decline, as indicated by a substantial adverse change or delta in trade balances. This suggests that India is facing more significant challenges in its international trade activities, which could have broader implications for its economic health and stability.

7. Politics and international policies

The relationship between a nation's currency value and the public's confidence in its governing institutions is a matter of significant importance. Recently, the Indian economy has been experiencing lackluster growth and a devaluation of the Indian rupee. This decline in the rupee's value is often attributed to various grievances and concerns aimed at the government.

Moreover, unfavorable media coverage has played a role in negatively impacting the economic performance of both Canada and India.

It's worth noting that the Canadian dollar has displayed relatively strong performance when compared to both the Indian rupee and the American dollar. These currencies have exhibited substantial fluctuations in their value, but they have shown remarkable resilience in facing such challenges. While the Indian rupee has depreciated, the Canadian dollar has displayed a positive and promising upward trajectory.

The fiscal authorities of both Canada and India stand to gain from having a currency that demonstrates a strong inclination toward stability. However, it's essential to recognize that even with meticulous planning, the execution of this process can only be guaranteed to occur intermittently. It is also important to emphasize that the prevailing market dynamics play a crucial role in influencing the rupee's valuation, and based on a thorough assessment of these dynamics, it is expected that the rupee's value will exhibit a persistent and stable trajectory throughout the year.