Why is the CAD to INR Exchange Rate Up today on 31st December 2022 (2nd half of December 2022)?

Key points:

• The CAD to INR exchange rate is up.
• Bank of Canada has increased the interest rates.
• The Reserve Bank of India has increased the interest rates.
• Unemployment and inflation rates have increased in India.
• Inflation rates have reduced in both India and Canada.

Over the past five years, the value of one Canadian dollar relative to one Indian rupee has increased steadily. One Canadian dollar equals sixty-nine Indian rupees as of November 30, 2022. The year 2022 ended with a high of 61.42 on December 27. December 19, 2022, was the lowest point, with a reading of 60.13. One Canadian dollar is currently worth approximately 60.81 Indian rupees. Over the past two weeks, the trend curve has been highly volatile, with a standard deviation of 0.123 rupees. Recent fluctuations in exchange rates are evidence that the value of the Canadian dollar has recovered. Sixty rupees or more is reasonable. This item, which used to cost between 50 and 55 rupees, is now $60. An overvalued currency, trade, foreign capital imbalance, and rising gas prices could all be to blame.

CAD to INR Exchange Rates (1 CAD into INR)
Date	Open	High	Low	Close
Dec 16, 2022	60.62	61.27	60.33	60.62
Dec 19, 2022	60.13	60.61	60.13	60.31
Dec 20, 2022	60.47	60.78	60.40	60.47
Dec 21, 2022	60.68	60.92	60.64	60.67
Dec 22, 2022	60.82	60.92	60.59	60.83
Dec 23, 2022	60.71	60.93	60.62	60.70
Dec 26, 2022	60.19	60.19	60.19	60.84
Dec 27, 2022	60.19	61.42	60.19	60.19
Dec 28, 2022	61.19	61.34	60.80	61.19
Dec 29, 2022	60.79	61.10	60.74	60.79
Dec 30, 2022	61.04	61.13	60.88	61.04
Dec 31, 2022	61.067	61.067	61.067	61.067

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

Many people are living in India. Imports meet about 80% of India's crude oil needs. As the fluctuating price of crude oil shows, the global economy has undergone significant changes. On December 27, 2022, there will be a 110.06% increase in cost to C$110.06. A series of price jumps and drops since November 16, 2022, can be seen by examining the trend line. Prices dropped to 109.11 Canadian Dollars on December 30, 2022. Although an optimistic reading is possible, the fact that it changes over time undermines its credibility.

If the price of crude oil were to drop, it would likely be more cost-effective and convenient to produce, transport, and sell. The Indian rupee could potentially gain value if the government were to reduce the rate of money printing.

Crude Oil (in CAD)
Date	High (CAD)	Low (CAD)	Close (CAD)
Dec 16, 2022	104.82	100.38	101.70
Dec 19, 2022	104.25	100.70	102.58
Dec 20, 2022	104.37	101.05	103.47
Dec 21, 2022	107.01	103.19	106.58
Dec 22, 2022	108.96	105.05	105.67
Dec 23, 2022	109.17	105.97	108.12
Dec 27, 2022	110.06	107.32	107.82
Dec 28, 2022	108.09	104.55	106.79
Dec 29, 2022	107.19	104.43	106.62
Dec 30, 2022	109.32	105.31	109.11

Canada also relies heavily on crude oil. Crude oil sales typically cover production costs and provide a profit. But by 2022, they are projected to import even more than they do now. In the second quarter of 2022, they brought in crude oil worth $1,754,000.00 in Canadian dollars, usually between $1 billion and $1.5 billion, which is much money compared to what they made at the start. An increase in the price of imported crude oil may benefit the Canadian dollar's value against the US dollar.

However, the Indian rupee's underperformance against the Canadian dollar against the US dollar suggests further losses for the Indian currency.

2. Commodity Prices and Import/Export

Canada and India have both made international purchases. These include various things, from minerals and metal ores to petroleum products, plastics and rubber, chemicals and energy sources, and more. The above factors significantly affect the CAD/INR currency exchange rate. The reason is that the currency’s value determines the performance of the country’s economy.

In August of 2022, Canada spent $9,702,000,000,000 on energy-related products. Add another 1046 million Canadian dollars for plastics and rubber, 1553 million for chemicals, 1007 million for metal ores and concentrates, and 4179 million for finished petroleum products. In August of 2022, Canada earned a total of CAD 638,644,000,000,000 and spent a total of $653,833,000,000. Canada's exports and imports are different in beneficial ways, as evidenced by the strength of the Canadian dollar compared to the US dollar. However, costs have decreased since June 2022, dropping by 32.4% to 17.6% by August 2022 and 8% by November 2022.

Canada: Commodity Prices
Date	% change YOY
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	17.3
Sep-22	12.7
Oct-22	8.6
Nov-22	8

These items were also sent from India. The total value of India's exports to Canada was C$81.91 billion. However, India only exported goods worth 45.02 billion Canadian dollars. Inflation and a decline in the value of the Indian rupee are the results of the wide gap between India's imports and exports.

India: Commodity Prices
Date	Base Points change YOY)
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	173.4
Aug-22	174.3
Sep-22	175.3
Oct-22	176.7

When inflation enters the picture, prices shift. From August 2022 (at 174.3 basis points) to October 2022 (176.7 basis points), goods prices have risen significantly. The Indian rupee is doing poorly compared to the US and Canadian dollars.

3. Interest rates

The Canadian public generally believes that prices will continue to rise. They are also anticipating higher costs associated with restoring economic health. The global economy is projected to expand by 3.5% in 2022, 2% in 2023, and 3% in 2024. In response to Canadians' need for assistance in coping with the country's poor economic situation, the Bank of Canada has taken the following measures.

One example is the recent increase in interest rates of 100 basis points. The central bank believes this is good for people, businesses, and consumers when the more consequential effects of rising inflation rates are considered. They aim to have it at a maximum of 2% by 2024. Inflation is growing, so interest rates will increase significantly in March 2022. From 2.5% in June and August 2022 to 4.25% in November 2022, a hike of 0.75 percentage points was implemented.

Canada: Interest Rates
Date	Rate (%)
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
Oct-22	3.75
Nov-22	4.25

As a result, the Reserve Bank of India followed suit. The Reserve Bank of India implemented a rate increase of 50 basis points. June 2022 rates were 4.9%; July and August 2018 rates were 5.4%. By December 2022, interest rates will be significantly higher than they are now. India's target inflation rate is 3% or less by 2024, down from the current 6%.

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

To obtain monetary resources, the government and private institutions have made more challenging. Inflation affects interest rates instantly and vices versa. Money loses purchasing power as prices rise.

4. Inflation rates

The inflation rate is a measure of how stable and valuable money is. Money loses purchasing power as prices rise. Almost every economy is struggling with inflation right now. While some nations will feel the effects, others will be able to weather the storm.

Canada's inflation rate has also increased dramatically. Inflation jumped by 5% in just a single year. Canada was among the hardest hit by the coronavirus pandemic. Unfortunately, the government's regulations prevented the expansion of factories. Rising inflation rates make it abundantly clear. Inflation in Canada has decreased from 8.1% in June 2022 to 7.6% in July 2022, and 6.9% in October 2022 after the Bank of Canada raised repo rates to combat inflation. Given the decline in inflation, Canada's economy has been flourishing recently.

Canada: Inflation Rates
Date	Rate (%)
Nov-21	4.7
Dec-21	4.8
Jan-22	5.1
Feb-22	5.7
Mar-22	6.7
Apr-22	6.8
May-22	7.7
Jun-22	8.1
Jul-22	7.6
Aug-22	7
Sep-22	6.9
Oct-22	6.9

Prices in India have been steadily climbing since September 2021. While growth appeared to slow at the beginning of 2022, inflation rates skyrocketed in March, April, and May of that year. Inflation rates rose in September 2022 from July 2022 lows of 6.71% to September 2022 highs of 7.41%. By October 2022, however, that figure will drop to 6.7%.

India: Inflation Rates
Date	Rate (%)
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
Sep-22	7.41
Oct-22	6.77

Rising inflationary pressures are a worrying trend. Based on the performance of their currency, the government and the Reserve Bank of India (RBI) in India appear to be unable to rein in inflation.

5. Unemployment rate and Job Availability

The unemployment rate and the number of available jobs indirectly affect the value of a country's currency. The economy is improving as more people can find work and more businesses can hire workers. In June 2022, Canada's unemployment rate fell to 4.9% from 5.1% in May. However, in August of 2022, rates increased to 5.4%. The drop from September to October of 0.2% doesn't negate the ongoing need for better employment opportunities. It bodes well for the labor market as a whole. Since February 2022, a large number of employment opportunities have arisen. Yet it's been declining for some time. When more people are employed and have disposable income, domestic investment, and inflation both fall. As a result of people's increased thrift, conditions improve.

Canada: Unemployment Rate
Date	Rate (%)
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
Oct-22	5.2

However, India's jobless rate has increased from 6.8% in July 2022 to 8.2% in August of the same year. Nonetheless, the unemployment rate fell dramatically to 6.4% in September 2022. In contrast, in October of 2022, it will be 7.7 percent. People have less money to spend because they are anxious about the future. That means fewer foreign funds are being invested in the country. The low unemployment rate in India could be because several multinational corporations have eased their hiring policies.

India: Unemployment Rate
Date	Rate (%)
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
Oct-22	7.7

6. Budget deficit and national debt levels

All but a handful of nations are debt-free. These are legitimate costs, but increasing debt causes inflation, which devalues the currency. When actual spending exceeds the budgeted amount, and inflation causes the value of money to decrease, the government responds by proposing a budget for the following fiscal year.

Canada spent $3.91 billion less than anticipated in the year’s first three months. Their external debt decreased to $ 2.49 billion in Q1 2022 from $ 2.59 billion in Q4 2021. As a result, the value of the Canadian dollar has increased. The chart below demonstrates that Canadian exports consistently exceed imports. When compared to exports, imports finally exceeded them in December 2021. A positive delta is maintained through the year 2022 in the country. The discrepancy was CAD$2,372.7M in July and CAD$1,519M in August 2022. One can infer the success of the Canadian dollar from the country's economic performance.

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

However, India's national budget is always released in February. In the first three months of 2022, India spent an extra USD 13.4 billion compared to its budget. India had USD 620 billion in foreign debt by the end of the first quarter of 2022. There was an increase after the fourth quarter of 2021 when its value was USD 614 billion. The result has been a decline in the value of the rupee and an increase in inflation.

Also, it would be best if you considered the trade deficit. India has never had a positive trade balance (income minus expenditures). India experienced a sizeable negative delta in July and August of 2022. The September 2022 value was 19.33 times lower at CAD M.

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

7. Politics and international policies

The stability of a country's government has an impact on its currency. The value of the money and the number of protests directed at the government decline when there is less confidence in the latter. Recently, Indians have been very critical of their government due to various issues, including the country's religious diversity, high taxes, the instability of political parties, etc. As a result, only a select few regions of the country are thriving. Inconsistent economic growth has hurt the value of the Indian rupee.

There have been many negative stereotypes about both Canada and India. For this reason, the value of both currencies has decreased. Canada's currency has performed better than the US dollar and the Indian rupee.

Both currencies have fared well because of their instability. In contrast, the Canadian dollar has performed much better than the Indian rupee. Neither of those coins compares favorably to the US dollar. The Canadian dollar has fared better than most other currencies. Both governments are committed to maintaining a robust currency, but unforeseen circumstances can disrupt their best-laid plans. It is expected that the value of the rupee will continue to fall until the new year when it will begin to rise again.