Why is the CAD to INR Exchange Rate Down today on 30th September 2022 (2nd half of September 2022)?

Updated on: 2022-10-15 - 10 mins read
Crude OilImport & ExportInterest RatesInflation RatesRemittance NewsExchange Rate AnalysisExchange Rate ForecastCAD to INR Exchange RateCommodity PricesUnemployment Rates
Why is the CAD to INR Exchange Rate Down today on 30th September 2022 (2nd half of September 2022)?

The CAD to INR exchange rate has consistently grown during the previous five years. 1 Canadian dollar=60.52 Indian rupees as of September 15, 2022. On the same day, the value peaked at 60.52. Nonetheless, the nadir on September 19, 2022, was 58.80. The Canadian dollar has averaged 59.74 Indian rupees. The graph below shows that the trend curve has been erratic in the last two weeks, with a standard deviation of 0.182 rupees (September 15, 2022, to September 30, 2022). The Indian rupee has regained some of its value, as seen by the drop-in exchange rates. The currency is likely to be worth more than 60 rupees. What used to be 50 to 55 rupees has now surpassed the 60-rupee level. It might be attributed to higher gasoline costs, a strong dollar, and a trade and foreign capital imbalance.

CAD to INR Exchange Rates (1 CAD into INR)
Date Open High Low Close
Sep 15, 2022 60.30 60.52 60.25 60.31
Sep 16, 2022 60.21 60.29 59.85 60.22
Sep 19, 2022 58.80 59.99 58.80 60.02
Sep 20, 2022 60.13 60.20 59.66 60.12
Sep 21, 2022 59.62 59.80 59.58 59.61
Sep 22, 2022 59.24 60.17 59.03 59.24
Sep 23, 2022 60.11 60.21 59.65 60.11
Sep 26, 2022 59.81 59.91 58.88 59.74
Sep 27, 2022 59.88 59.88 59.28 59.88
Sep 28, 2022 59.47 59.82 59.17 59.46
Sep 29, 2022 59.69 59.82 59.40 59.69
Sep 30, 2022 59.5288 59.6537 59.1001 59.5405

Several factors affect the CAD to INR exchange rates:

1. Crude Oil

India has one of the world's most significant populations. India imports more than 80% of what it needs from foreign nations to fulfill crude oil consumption. The global economy has been quite turbulent. It has also been observed in the crude oil price. On September 26, 2022, the price reached a high of $76.25. The trend line indicates that prices have been falling since September 15, 2022. Prices reached a low of $89.15 on September 15, 2022. It may be seen positively, but the volatility suggests otherwise.

A drop in cost might imply that product production, transportation, and manufacturing can be simpler and more affordable. It might lead to a decrease in inflation, increasing the value of the Indian rupee. That, however, has not been the case. Several other reasons contribute to the rupee's poor performance.

Crude Oil (in CAD)
Date High Low Close
Sep 15, 2022 117.33 111.25 112.00
Sep 16, 2022 114.71 111.63 112.75
Sep 19, 2022 114.31 108.85 113.66
Sep 20, 2022 114.49 110.61 111.84
Sep 21, 2022 115.83 110.23 110.83
Sep 22, 2022 115.92 111.07 112.54
Sep 23, 2022 113.05 105.13 106.07
Sep 26, 2022 109.07 103.56 104.18
Sep 27, 2022 109.02 104.78 107.63
Sep 28, 2022 112.99 105.04 112.73
Sep 29, 2022 113.03 109.49 110.70
Sep 30, 2022 112.89 108.22 108.69

Canada is similarly heavily reliant on crude oil. Typically, their crude oil export exceeds their crude oil import. However, their imports are expected to increase dramatically in 2022. They imported 1754 million Canadian dollars of crude oil in the second quarter of 2022. This figure is far greater than their previous import, typically between $1000 and $1500 million (CAD). The rising cost of crude oil imports in Canada means that the Canadian currency may perform well against the US dollar.

However, the gap in performance between the Indian rupee and the Canadian dollar against the US dollar implies that the rupee's value against CAD may decline further.

2. Commodity Prices and Import/Export

Canada and India have imported metal ores and minerals, refined petroleum products, plastic and rubber goods, chemicals, energy products, and other commodities. The commodities indicated above significantly affect the CAD-INR exchange rate since the total import-export deficit affects the currency's performance versus the US dollar.

In August 2022, Canada imported energy products valued at 9702 million Canadian dollars, plastic and rubber products valued at 1046 million Canadian dollars, chemicals valued at 1553 million Canadian dollars, metal ores and concentrates valued at 1007 million Canadian dollars, and refined petroleum products valued at 4179 million Canadian dollars. Canada's total imports in August 2022 were 63864.00 million Canadian dollars, while its exports were 65383.00 million. The currency has benefited from the optimistic gap between exports and imports, as seen by the Canadian dollar's success versus the US dollar. Aside from that, prices have dropped dramatically from 32.4% in June 2022 to 19.1% in July 2022 and 17.6% in August 2022.

Canada: Commodity Prices
Date % change YOY
Sep-21 32.5
Oct-21 38.6
Nov-21 37.6
Dec-21 29.3
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 17.6

Similarly, India also imported such commodities. India's total import was worth 81.91B Canadian dollars. However, India's export was only worth 45.02B Canadian dollars. This stark negative difference between imports and exports has led to a low GDP, which thereby has caused inflation, thus reducing the value of the Indian rupee.

India: Commodity Prices
Date Base Points change YOY)
Sep-21 163.2
Oct-21 165.5
Nov-21 166.7
Dec-21 166.2
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-22 182.9
Aug-22 192.3
commodity -prices-india-from-sep-2021-to-aug-2022

Commodity prices are affected by inflation. According to the chart above, commodity costs have risen dramatically from 182.9 basis points in July 2022 to 192.3 basis points in August 2022. This trade gap supports and verifies the Indian currency's dismal performance versus the USD and the CAD.

3. Interest rates

Canada expects inflation to rise further. They also anticipate that restoring economic stability will be more expensive. They predict global economic growth will slow from 3.5% in 2022 to 2% in 2023 before rebounding to 3% in 2024. The Bank of Canada has taken corrective steps to lessen the impact of the country's faltering economy on its citizens.

Canada: Interest Rates
Date Rate (%)
Jun-21 0.2
Jul-21 0.2
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

One such action was a 100-basis point rise in the interest rate. The bank feels this will benefit consumers, companies, and people as they analyze the broader implications of rising inflation rates. They intend to cut inflation to 2% by 2024. The sharp increase in interest rates beginning in March 2022 reflects rising inflation rates. There has been a 0.75% increase from 2.5% in June and August 2022 to 3.25% in September 2022.

The Reserve Bank of India has taken similar action. The RBI raised interest rates by 50 basis points. Interest rates have climbed from 4.9% in June 2022 to 5.4% in July and August. However, experts anticipate that interest rates will rise further by December 2022. By 2024, India hopes to reduce inflation from 6% to less than 3%.

India: RBI Interest Rates
Date Rate (%)
Feb-19 6.25
Apr-19 6.00
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

It raises lending and borrowing rates in public and private institutions, making life more difficult for individuals. These interest rates directly influence inflation and, as a result, the currency's value. Inflation reduces the purchasing power of money.

4. Inflation

The inflation rate provides information on the currency's performance and worth. Inflation reduces the purchasing power of money. In practically every country today, inflation is an issue. While some countries suffer from it, others can live with the consequences.

Inflation rates in Canada have also risen dramatically. Within a year, the inflation rate increased by 5%. Canada was one of the nations hit hard by the coronavirus epidemic

Canada: Inflation Rates
Date Rate (%)
Sep-21 4.40
Oct-21 4.70
Nov-21 4.70
Dec-21 4.80
Jan-22 5.10
Feb-22 5.70
Mar-22 6.70
Apr-22 6.80
May-22 7.70
Jun-22 8.10
Jul-22 7.60
Aug-22 7.00

In India, inflation has been rising since September 2021. Growth looked to decelerate at the start of 2022, but inflation rates increased sharply in March, April, and May. Following a decrease in July 2022, inflation rates have risen from 6.71% in July 2022 to 7.41% in September 2022.

India: Inflation Rates
Date Rate (%)
Sep-21 4.35
Oct-21 4.48
Nov-21 4.91
Dec-21 5.66
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

The rise in inflation rates looks to be a negative indication. The efforts of the RBI and the Indian government don’t appear to be succeeding in inflation at the time, and the currency's performance reflects this.

5. Unemployment rate and Job Availability

Indirectly, employment rates and job availability impact the currency. Increased employment and job availability indicate that the economy is stabilizing. The unemployment rate in Canada has fallen from 5.1% in May 2022 to 4.9% in June 2022. However, rates rose to 5.4% in August 2022. Despite a 0.2% decrease in September, this shows that individuals are having difficulty obtaining work. It suggests that more individuals are finding jobs.

Canada: Unemployment Rate
Date Rate (%)
Dec-21 6
Jan-22 6.5
Feb-22 5.5
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

The employment rate has been quite strong since February 2022 but declined in September. Because employed people have more purchasing power, the domestic investment will rise, lowering inflation. It improves the performance and worth of the money.

India: Unemployment Rate
Date Rate (%)
Oct-21 7.74
Nov-21 6.97
Dec-21 7.91
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

In India, however, the unemployment rate has risen from 6.8% in July 2022 to 8.2% in August 2022. Nonetheless, unemployment fell significantly in September 2022, with the jobless rate falling to 6.4%. Its uncertainty and instability have diminished people's purchasing power, decreasing domestic investment in the country. Several multinational corporations in India have removed their hiring freezes, which might explain the low jobless numbers.

6. Budget deficit and national debt levels

Almost all countries are in debt. While these obligations are manageable, increasing debt levels cause inflation, which causes the currency to depreciate. Similarly, a government submits its budget for the next fiscal year when actual expenditure exceeds the budget and inflation rises, destabilizing the currency.

Canada: Balance of Trade
Date CAD$ Millions
Sep-21 731.60
Oct-21 1655.60
Nov-21 2236.90
Dec-21 -1448.10
Jan-22 3336.30
Feb-22 2836.80
Mar-22 2006.90
Apr-22 1941.50
May-22 4768.90
Jun-22 5046.30
Jul-22 2372.70
Aug-22 1519.00

Canada spent USD 3.91 billion less than its budgeted amount in the first quarter. In addition, their external debt has decreased from $USD 2.59 billion in the fourth quarter of 2021 to $USD 2.49 billion in the first quarter of 2022. As a result, the Canadian dollar has performed well.

According to the graph below, Canada's exports are usually more than its imports. Only in December 2021 did imports surpass imports. Throughout 2022, the country has maintained a positive delta. They had a delta of CAD 2372.7M in July and a delta of CAD 1519M in August 2022. The success of Canada in this regard demonstrates the strength of the Canadian currency.

India: Balance of Trade
Date CAD$ Millions
Sep-21 12.19
Oct-21 11.12
Nov-21 10.19
Dec-21 14.06
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

On the other hand, India announces its union budget every year in February. India spent USD 13.4 billion more than the budget in the first quarter of 2022. And, as of the end of the first quarter of 2022, India's external debt was at USD 620 billion.

This is up from USD 614 billion in the fourth quarter of 2021. It has pushed up the country's inflation rate, weakening the rupee. Another factor is the trade balance. India's imports have always been more than its exports. India has a sizeable negative delta in July and August 2022. However, by September 2022, it has dropped to a negative delta of 19.33 CAD M.

7. Politics and international policies

A government's stability also influences the country's currency—more uprisings and demonstrations against the government, fewer foreign investments, and a lower currency value. Recently, the Indian government has received harsh criticism from its inhabitants for various reasons, including religion, taxation, political party instability, etc. It has resulted in the prosperity of only a few regions of the country. Its uneven development has also resulted in the devaluation of the Indian rupee.

Both Canada and India have had to deal with public outrage. It has had a detrimental impact on both currencies. However, Canada has performed better than the US dollar and the Indian rupee.

Both currencies have underperformed due to extreme volatility and instability. However, the Indian rupee has performed far worse than the Canadian dollar. The performance of both currencies against the US dollar has been wrong. Nonetheless, when contrasted, the Canadian dollar has performed significantly better. While both governments try to strengthen their respective currencies, unexpected circumstances offer challenges. The rupee is anticipated to decline further before regaining its value at the start of the following year.