Why is the CAD to INR Exchange Rate Up today on 31st January 2023 (2nd half of January 2023)?

Key points:

• The exchange rate from CAD to INR is going up.
• 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.

Canadian dollars have become increasingly valuable in recent years, outperforming their Indian rupee counterparts by a factor of five. One Canadian dollar equals 69 Indian rupees as of November 30, 2022. The highest point of the year was reached on January 27 of that year, 2023, at 61.27. However, it hit a record low of 59.63 three days ago. Presently, one Canadian dollar is equivalent to about 60.68 Indian rupees. With a standard deviation of 0.188 rupees, the trend curve has been quite unpredictable over the past two weeks. The value of the Canadian dollar has risen as of late, as evidenced by fluctuations in exchange rates. It's reasonable to expect to pay at least 60 Indian rupees. The original price range for this product was 50–55 rupees. We've increased the price to $60. Possible causes include an overvalued currency, unbalanced foreign capital, increased gas prices, and increased demand.

CAD to INR Exchange Rates (1 CAD into INR)
Date	Open	High	Low	Close
Jan 16, 2023	59.87	60.96	59.87	60.65
Jan 17, 2023	60.89	61.04	60.79	60.88
Jan 18, 2023	60.91	61.05	60.46	60.91
Jan 19, 2023	60.29	60.40	60.12	60.29
Jan 20, 2023	60.28	60.40	60.06	60.28
Jan 23, 2023	59.63	60.99	59.63	60.47
Jan 24, 2023	60.89	61.09	60.81	60.92
Jan 25, 2023	60.97	61.19	60.65	60.94
Jan 26, 2023	60.86	61.15	60.70	60.86
Jan 27, 2023	61.11	61.27	61.05	61.09
Jan 30, 2023	60.60	61.23	60.60	61.19
Jan 31, 2023	60.8548	61.2689	60.7449	60.8518

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

There are a lot of people living in India. It supplies roughly 80% of India's annual demand for crude oil. A good indicator of the state of the global economy is the fluctuating cost of crude oil. On January 23, 2023, the cost reached a high of $110.5 Canadian. The price dropped to 103.64 Canadian dollars on January 30, 2023. While it's possible to find encouragement in the passage, its dynamic nature makes it less trustworthy.

It would be more financially viable to produce, transport, and sell if the price of crude oil dropped. To increase the value of the Indian rupee, the government should reduce the rate at which new currency is created.

Crude Oil (in CAD)
Date	High (CAD)	Low (CAD)	Close (CAD)
16-Jan-23	107.46	105.20	105.63
17-Jan-23	108.83	105.21	107.43
18-Jan-23	110.31	105.70	106.42
19-Jan-23	109.56	105.44	108.41
20-Jan-23	109.92	107.29	109.48
23-Jan-23	110.50	108.37	109.13
24-Jan-23	109.93	106.51	107.13
25-Jan-23	108.65	106.26	107.20
26-Jan-23	109.90	106.93	108.39
27-Jan-23	109.83	105.25	106.10
30-Jan-23	107.08	103.32	103.64

Even Canada has a heavy reliance on the commodity. Money made from selling crude oil typically exceeds the costs associated with doing so. However, by 2022, they are projected to earn even more money. Their Q2 2022 crude oil imports were valued at CAD 1,754,000.00. In most cases, it's between $1 billion and $1.5 billion, a considerable sum of money compared to their starting salary. The Canadian dollar may strengthen against the United States dollar if imported crude oil prices rise.

However, the declining value of the Indian rupee compared to the Canadian and US dollars is expected to continue.

2. Commodity Prices and Import/Export

In the past, both Canada and India have made international purchases. Minerals and metal ores, petroleum products, plastics and rubber, chemicals, and energy sources are all included. The abovementioned factors heavily influence the CAD/INR exchange rate. A country's economy's health is tied to its currency's value.

Canada spent $9,702 billion on energy-related goods in August 2022. Plastics and rubber are worth 1046 million Canadian dollars, chemicals $153 million, metal ores and concentrates $100 million, and finished petroleum products $4179 million. The total income for Canada in August 2022 was 638,644,000,000,000 CAD, while total expenditures were 653,833,000,000,000 CAD. Canada's exports and imports are positively distinctive, which is reflected in the strength of the Canadian dollar compared to the US dollar. However, prices have been falling since June 2022, from 32.4% to 17.6% in August 2022 and 7.5% in December 2022.

Canada: Commodity Prices
Date	% change YOY
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	7.9
Dec-22	7.5

Additionally, these items were shipped over from India. Canadians received goods worth a total of C$81.91 billion from India. However, the value of Indian exports to Canada was only $45.02 billion. There is a significant discrepancy between India's imports and exports. The result is a depreciating rupee and rising prices.

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

Inflation causes an adjustment in pricing. From August 2022 to December 2022, the price of goods increased by 174.3 basis points (175.7 basis points). The Indian rupee is weak compared to the US and Canadian dollar.

3. Interest rates

Most Canadians anticipate further price increases. They also predict that restoring economic health will incur additional expenses. In 2022, the global economy was expected to grow by 3.5%, in 2023 by 2%, and in 2024 by 3%. To help Canadians weather the current economic storm, the Bank of Canada has implemented the following measures.

The recent increase of 100 basis points in interest rates is just one illustration. The central bank believes that people, businesses, and consumers will benefit from rising inflation rates when the longer-term effects are considered. By 2024, they envision it at a maximum of 2%. Interest rates will increase dramatically in March 2023 due to rising inflation. The rate increased from 2.5% in June and August 2022 to 4.25 in November 2022, a 0.75 percentage point jump.

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 followed suit. India's central bank, the Reserve Bank of India, raised rates by 50 basis points. Interest rates were 4.9% in June 2022 and 5.4% in July and August 2018. By December of 2022.2, interest rates had risen to 6.5%. Indian officials aim to have inflation at or below 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

Both public and private organizations have made it more challenging to acquire funds by increasing the number of obstacles one must overcome on the path to financial independence. There is an immediate response in interest rates to shifts in inflation and a corresponding change in inflationary expectations. In a rising cost of living economy, less can be purchased with the same amount of money.

4. Inflation rates

The inflation rate can be used as a proxy for money's stability and purchasing power. In a rising cost of living economy, less can be purchased with the same amount of money. Inflation is a problem for almost every economy right now. Though some nations will be severely impacted, others will be spared.

The Canadian inflation rate has also increased significantly. The price increase was 5% in a single year. The effects of the coronavirus pandemic were felt in Canada. As inflation rates increased, it became clear that government regulations were preventing factories from expanding. Canadian consumer prices decreased from 8.1% in June 2022 to 7.6% in July 2022, and 6.3% in December 2022 after the Bank of Canada raised repo rates to combat inflation. Canada's economy has been thriving as inflation has been falling.

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

The cost of living in India has increased consistently since September 2021. Despite a sluggish start to 2022, when both growth and prices appeared to be leveling off, March, April, and May saw unprecedented price increases. The inflation rate peaked in December 2022 at 5.72% after rising from July through September.

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

Rising inflationary pressures are a cause for concern. The Reserve Bank of India (RBI) and the government of India are powerless in the face of rising prices because of the current state of the Indian rupee.

5. Unemployment rate and Job Availability

The value of a country's currency is affected by the number of people actively seeking work and the number of unemployed people. The economy is improving as more people gain access to the labor force, and companies expand their workforce. In June 2022, Canada's unemployment rate fell to 4.9% from 5.1% in May. Rates had been at 4%, which increased to 5.4% in August of 2022. While the 0.2% drop in unemployment from October to December is encouraging, it does not negate the need for expanded employment opportunities. It is well suited for use in today's job market. There have been a plethora of new employment possibilities since February of 2022. Still, it's been going downhill for a while now. Both domestic investment and inflation fall as the labor force expands and more people have disposable income. As a result of people's increased willingness to save, conditions are improving.

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

The unemployment rate in India increased from July 2022 (6.8%) to August 2022 (8.2%). Despite this, experts predict that by September 2022, the unemployment rate will have dropped dramatically to 6.4%. For context, in December of 2022, it was 8.3 percent. Worries about the future have led consumers to cut back on their spending. It indicates that fewer international financial resources are being invested in the nation. The easing of hiring restrictions by some multinational corporations accounts for India's 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

All nations, with a few notable exceptions, are entirely debt-free. There's no denying the necessity of expenses like these, but mounting debt inevitably results in inflation, which devalues the currency. The government proposes a budget for the following fiscal year when actual spending exceeds budgeted levels and inflation reduces the purchasing power of money.

Canada spent $3.91 billion less than predicted in the first three months of this year. 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 increased. The chart below demonstrates that Canada's exports have far outpaced its imports over the years. The gap between imports and exports finally closed in December 2021. Until 2022, the country will have a positive delta. The gap was CAD$2,372.7M in July, and a total of CAD$40M in debt is due in November 2022. The prosperity of Canada's economy reflects the success of the Canadian dollar.

Canada: Balance of Trade
Date	CAD $ Millions
Jan-22	3336.3
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	1519
Sep-22	610
Oct-22	130
Nov-22	-40

However, India's national budget is always presented in February. In India, a total of USD 13.4 billion more was spent than planned in the first three months of 2022. India's total external debt reached USD 620 billion by the end of the first quarter of 2022. It will be worth $614 billion by the end of 2021. For this reason, the value of the rupee has dropped, and inflation has increased.

Taking the trade deficit into account is also recommended. India's trade balance has always been negative (income minus expenditures). A significant negative delta hit India in July and August of 2022. The trade deficit in November 2022 was worth 15.3 million Canadian dollars.

India: Balance of Trade
Date	CAD$ Millions
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
Oct-22	20.7
Nov-22	15.3

7. Politics and international policies

A country's currency values reflect the stability of its government. There are fewer protests and a decrease in the value of money when people don't trust the government. As a result of a variety of factors—including the diversity of the country's religions, high taxes, the instability of the country's political parties, etc.—Indians have become increasingly critical of their government. Because of this, some areas of the country are thriving while others are not. Since the Indian economy has been growing at an inconsistent rate, the value of the rupee has decreased.

There has been a lot of negative coverage of both Canada and India. For this reason, the worth of both currencies has decreased. In terms of value, the Canadian dollar has fared better than its Indian and American counterparts.

Due to the lack of stability in both currencies, they have performed well. But the Canadian dollar has done considerably better than the Indian rupee. There is no comparison between these two coins and the value of one US dollar. The Canadian dollar has fared better than most other currencies. Both governments prefer stable currencies, but unforeseen events can derail the best-laid plans. Until the new year, the value of the rupee is expected to continue falling.