Why is the CAD to INR Exchange Rate Down today on 28th February 2023 (2nd half of February 2023)?

Key points:

• The exchange rate from CAD to INR is going down.
• The Bank of Canada raised interest rates.
• The Reserve Bank of India has increased the interest rates to 6.5% and is expected to raise interest rates by 25 bps in February 2023.
• Inflation and Unemployment rates are up in India and Canada.

The Canadian dollar has become five times more valuable in the past few years than the Indian rupee. One Canadian dollar is worth 61 Indian rupees as of February 1, 2023. The index reached a record high of 61.81 on February 16, 2023. But on February 27, 2023, it fell to 60.29, a new record low. You can now buy about 61.57 Indian rupees with one Canadian dollar. The trend curve has been volatile in the last two weeks, with a standard deviation of 0.083 rupees. Changes in exchange rates show how the Canadian dollar has gotten stronger over the past few months. The price must be at least sixty Indian rupees (INR). At first, this item could be bought for between 50 and 55 rupees. Before it was $50, now it's $60. Possible reasons are that the currency is overvalued, there is an imbalance in foreign capital, gas prices are rising, and demand is increasing.

CAD to INR Exchange Rates (1 CAD into INR)
Date	Open	High	Low	Close
Feb 16, 2023	61.75	61.81	61.39	61.74
Feb 17, 2023	61.32	61.38	61.13	61.33
Feb 20, 2023	60.37	61.46	60.37	61.37
Feb 21, 2023	61.40	61.53	61.15	61.41
Feb 22, 2023	61.17	61.23	61.04	61.17
Feb 23, 2023	61.10	61.19	60.82	61.10
Feb 24, 2023	60.95	61.06	60.61	60.95
Feb 27, 2023	60.29	60.99	60.29	60.86
Feb 28, 2023	60.83	60.87	60.60	60.83

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 is home to a large number of people. About 80% of India's crude oil needs every year are met by this source. Changes in the price of crude oil are an excellent way to measure the health of the world economy. On February 28, 2023, the price reached a high of CAD 107.68. It was only 99.28 Canadian dollars on February 21, 2023. Finding hope in the passage is possible, but how it flows makes it less reliable.

If the price of crude oil went down, it would be easier and cheaper to make, ship, and sell. To raise the value of the rupee, the Indian government should stop making so many new ones.

Crude Oil (in CAD)
Date	High (CAD)	Low (CAD)	Close (CAD)
Feb 16, 2023	106.51	104.34	105.11
Feb 17, 2023	105.43	101.13	102.85
Feb 20, 2023	104.50	102.05	102.68
Feb 21, 2023	102.98	99.28	99.48
Feb 22, 2023	102.85	99.93	102.04
Feb 23, 2023	103.78	100.34	103.36
Feb 24, 2023	104.43	101.94	102.88
Feb 27, 2023	105.65	102.55	104.59
Feb 28, 2023	107.68	104.79	107.04

So important is the good that even Canada depends on it a lot. Most of the time, the money made from selling crude oil is more than what it costs to make it. By 2022, they will make even more money. In the second quarter of 2022, they spent $1,754,000.00 to bring in crude oil. Most of the time, it's between $1 billion and $1.5 billion, a lot of money compared to what they made when they first started. If imported crude oil prices increase, the Canadian dollar might get stronger.

The value of the Indian rupee will continue to fall against the Canadian and US dollars, though.

2. Commodity Prices and Import/Export

Canada and India have both made international purchases in the past. Materials such as metal ores, plastics, rubber, chemicals, and fuels are also included. The Canadian dollar to Indian rupee exchange rate is significantly affected by the elements above. A country's economy's strength is correlated with its currency's value.

In August of 2022.2, Canada spent $9.702 trillion on energy-related products. The value of plastics and rubber in Canada is $1046 million, chemicals $153 million, metal ores and concentrates $100 million, and petroleum products in their final form $4179 million. Canada brought in 638,644,000,000,000 CAD in revenues that month and spent 653,833,000,000,000 CAD. The relative strength of the Canadian dollar versus the US dollar directly results from the distinct nature of Canadian exports and imports. Price drops have been consistent since June 2022, when they were 32.4%, with subsequent decreases to 17.6% in August 2022 and 1.2% in January 2023.

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

India exported goods to Canada worth C$81.91 billion in total. Indian exports to Canada were only $45.02 billion in value. In India, imports far exceed exports. The rupee's fall causes inflation and higher prices.

India: Commodity Prices
Date	Base Points change YOY)
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
Nov-22	176.5
Dec-22	175.7
Jan-23	176.5

If inflation is present, then prices must be changed. Inflation in the cost of goods was 174.3 percentage points higher from August 2022 to January 2023. (176.5 basis points). When compared to the US and Canadian dollars, the Indian rupee is significantly weaker.

3. Interest rates

Most Canadians think that prices will keep going up. They also believe that getting the economy going again will add to the budgetary burden. The world economy was expected to grow by 3.5% in 2022, 2% in 2023, and 3% in 2024. To help Canadians get through the current economic storm, the Bank of Canada has done the following things.

Think about how the interest rate just went up by 100 basis points. The central bank thinks that people, businesses, and consumers will all be better off in the long run if inflation rates increase. They believe that in 2024, it will peak at just 2%. Because inflation is rising, interest rates will go up a lot in March 2023. The rate went from 2.5% in June and August 2022 to 4.25% in November 2022, a rise of 0.75 percentage points.

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

Because of this, the Reserve Bank of India did the same thing. The central bank of India, the Reserve Bank of India, raised rates by 50 basis points. In July and August of 2018, the interest rate was 5.4%. In July, it was 4.9%, and in August 2022, it was still 4.9%. In the end, interest rates would reach 6.5% in December 2022.2. The Indian government wants inflation to be less than or equal to 3% by 2024.

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

The government and the private sector have made it harder to get money by putting up more obstacles to financial independence. Interest rates change right away when inflation and expectations of inflation change. As the cost of living increases, people have less money to spend.

4. Inflation rates

The inflation rate is a good proxy for how long money will last and how much it can buy. As the cost of living increases, people have less money to spend. Almost every economy is having trouble right now with inflation. Some countries will be hit very hard, while others will not be affected at all.

The rate of inflation in Canada has also gone up a lot. The prices went up by 5% in just one year. The worldwide coronavirus pandemic did not skip over Canada. As inflation rates increased, it became clear that government rules were stopping factories from growing. After the Bank of Canada raised repo rates in June 2022 to fight inflation, consumer prices in Canada went down from 8.1% in June 2022 to 7.6% in July 2022 and 5.9% in January 2023. The Canadian economy has been doing very well as inflation has gone down.

Canada: Inflation Rates
Date	Rate (%)
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
Nov-22	6.8
Dec-22	6.3
Jan-23	5.9

Since September 2021, the cost of living in India has increased steadily. Even though growth and prices leveled off early in 2022, there were considerable jumps in March, April, and May. After steadily increasing from July to September 2023, the inflation rate reached its highest point in January 2024, at 6.52%.

India: Inflation Rates
Date	Rate (%)
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
Oct-22	6.77
Nov-22	5.88
Dec-22	5.72
Jan-23	6.52

A feeling of inflationary pressure that is getting worse is a problem. The Reserve Bank of India (RBI) and the government of India have no choice but to raise prices because the Indian rupee is in such bad shape.

5. Unemployment rate and Job Availability

The value of a country's currency is affected by the number of people without jobs and the number of people working. The economy improves as more people join the workforce and businesses hire more people. In May 2022, the unemployment rate in Canada was 5.1%. In June 2022, it was 4.9%. From August 2022, the rate will increase from 4% to 5.4%. Even though the unemployment rate went from 0.2% to 0.1% between October and December, there still needs to be more job openings. It works in today's job market and is ready to be used. Since February 2022, there have been a lot of brand-new job openings. But things have been getting worse for a while. As more people join, the labor force and buying power increase, and domestic investment and inflation both decrease. The economy has gotten better because more people are willing to save money.

Canada: Unemployment Rate
Date	Rate (%)
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
Nov-22	5.1
Dec-22	5

In India, the unemployment rate went from 6.8% in July 2022 to 8.2% in August of that same year. Even so, experts are sure that the unemployment rate will have dropped significantly by September 2022, when it will be 6.4%. In December 2022, on the other hand, it was 8.3 percent. People are spending less because they are worried about the economy. This trend shows that foreign investment in the country is going down. Some multinational companies have made it easier to hire people, which is why India has a low unemployment rate.

India: Unemployment Rate
Date	Rate (%)
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
Nov-22	8
Dec-22	8.3

6. Budget deficit and national debt levels

Every country in the world has no debt, with a few exceptions. There's no question about how high these costs are, but rising debt levels cause inflation and a drop in the currency's value. When actual spending exceeds what was planned, and inflation makes money less valuable, the government makes a budget for the next fiscal year.

Canada spent $3.91 billion less in the first three months of this year than it had planned. From Q4 2021 to Q1 2022, their external debt decreased by $59 million, from $2.59 billion to $2.49 billion. Because of this, the value of the Canadian dollar has gone up. The following graph shows that Canada's exports have consistently grown faster than its imports. In December 2021, what was imported and what was exported were the same. Until 2022, the country will have a positive delta. The shortfall was CAD 2,372.7M in July, and CAD 40M in debt was due in November 2022. The health of the Canadian economy shows how well the Canadian dollar has done.

Canada: Balance of Trade
Date	CAD $ Millions
Feb-22	2836.8
Mar-22	2006.9
Apr-22	1941.5
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

India's national budget, however, is always unveiled in February. The first three months of 2022 saw overspending of USD 13.4 billion in India. By the end of the first quarter of 2022, India had accumulated USD 620 billion in total external debt. By 2021's close, it will be worth $614 billion. Since this is the case, the value of the rupee has decreased, and inflation has risen.

Additionally, it is suggested that the trade deficit be considered. The trade deficit in India has persisted throughout its history (income minus expenditures). In July and August of 2022, India was hit by a significant negative delta. In January 2023, Canada racked up a trade deficit of C$23.4 million.

India: Balance of Trade
Date	CAD$ Millions
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
Oct-22	20.7
Nov-22	15.3
Dec-22	31.8
Jan-23	23.4

7. Politics and international policies

The value of a country's currency can be used to measure how stable its government is. People are less likely to protest when they don't trust their government, and the value of their currency goes down. Indians are becoming more critical of their government for several reasons, such as the country's many different religions, high taxes, and the instability of its political parties, among other things. Because of this, some parts of the country do well, and some need to do better. The unstable growth rate in India's economy is to blame for the fall in the value of the rupee.

Canada and India have gotten a lot of bad press from the media. Because of this, the worth of both currencies has gone down. The Canadian dollar has done better than its Indian and American counterparts.

Even though both currencies are very volatile, they have done well. The Canadian dollar has been strong, while the Indian rupee has been weak. In the United States, these two coins don't have the same value as a dollar. The Canadian dollar has done well compared to other currencies. Both governments would be better off with a stable currency, but even the best-laid plans can be thrown off by something unexpected. The rupee's value is expected to continue until the year's end.