Why is the CAD to INR Exchange Rate Down today on 30th June 2023 (2nd half of June 2023)?

Key points:

• Canada Dollar to Indian Rupee Exchange Rate decreases.
• The Bank of Canada has recently decided to increase interest rates.
• Based on our financial analysis, it is anticipated that the interest rates in India will experience a 25 basis point surge by 2023. This upward movement will increase the current rate of 6.5 percent, aligning it with the projected level.
• Both the Indian and Canadian economies have witnessed a notable uptick in inflation and unemployment rates in recent times.

As of the reporting date of June 30, 2023, it is observed that the Canadian dollar has demonstrated a positive trend in value relative to the Indian rupee, as evidenced by the prevailing exchange rate of 1 CAD to 60 INR. The observed appreciation can be ascribed to the sustained upward trajectory of the Canadian dollar's value throughout the years. In the latter part of June 2023, the exchange rate between the two currencies experienced significant volatility, exhibiting fluctuations ranging from a high point of 62.44 to a low end of 61.35. The standard deviation of the trend curve has been determined to be 0.135 rupees. The Canadian dollar has experienced a notable appreciation in response to recent fluctuations in the exchange rate. The product has experienced a substantial decline in its price, plummeting from 5055 rupees to a mere 60 rupees. The potential for asset overvaluation may be attributed to trade deficits or abrupt increases in demand and pricing for petroleum products.

CAD to INR Exchange Rates (1 CAD into INR)
Date	Open	High	Low	Close
Jun 16, 2023	61.8844	62.0648	61.829	61.8942
Jun 19, 2023	61.3672	62.111	61.3662	62.0003
Jun 20, 2023	61.9513	62.096	61.7684	61.957
Jun 21, 2023	61.9424	62.185	61.8961	61.9334
Jun 22, 2023	62.2014	62.3112	62.1446	62.208
Jun 23, 2023	62.2784	62.2995	61.9278	62.2954
Jun 26, 2023	61.3503	62.3743	61.3463	62.138
Jun 27, 2023	62.2943	62.4386	62.1145	62.3044
Jun 28, 2023	62.0853	62.1251	61.7517	62.0788
Jun 29, 2023	61.842	61.9424	61.7331	61.8535
Jun 30, 2023	61.917	61.942	61.825	61.839

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

Due to the substantial demographic size of the country, this exclusive supplier possesses the capacity to meet approximately 80% of India's annual demand for crude oil. The dynamic oscillations in the price of natural oil are a reliable gauge of the holistic well-being of the worldwide economy. The security experienced a decline in value from 99.04 CAD on June 21, 2023, to 89.68 CAD on June 28, 2023. The passage demonstrates the considerable potential for improvement in its overall composition. A decline in crude oil prices is expected to favor various sectors within the industry, encompassing extraction, distribution, and retail. A prospective approach to enhancing the valuation of the Indian rupee would entail implementing measures aimed at curtailing the production of fresh banknotes.

Crude Oil (in CAD)
Date	High (CAD)	Low (CAD)	Close (CAD)
Jun 16, 2023	97.48	94.85	97.33
Jun 20, 2023	97.70	94.39	95.54
Jun 21, 2023	99.04	96.43	98.79
Jun 22, 2023	99.04	93.97	94.76
Jun 23, 2023	94.19	91.08	93.53
Jun 26, 2023	93.81	91.93	92.82
Jun 27, 2023	93.80	90.26	90.53
Jun 28, 2023	93.26	89.68	93.04
Jun 29, 2023	94.41	92.17	93.42
Jun 30, 2023	94.55	93.90	94.36

This specific asset demonstrates considerable intrinsic worth in the Canadian and other international markets. The profitability of crude oil sales typically exceeds the associated production expenses. Based on our comprehensive analysis, it is evident that the market is poised to undergo a substantial expansion and witness a notable surge in profitability by the year 2023. In the second quarter of 2022, the market value of crude oil experienced a significant surge, culminating in prices soaring to an impressive $1,754,000 per barrel. The observed wave exhibits a remarkable deviation from the average initial annual yield, which typically falls within the $1 to $1.5 billion range. The Canadian dollar has the potential to appreciate due to an increase in imported crude oil expenses.

The Indian rupee is expected to sustain a downward trajectory against Canadian and US dollars.

2. Commodity Prices and Import/Export

The exchange rate dynamics between the Canadian dollar and the Indian rupee are intricately influenced by consumer preferences in both nations, resulting in notable fluctuations. The determination of the exchange rate was predicated upon a comprehensive assessment of the relative economic prowess exhibited by both countries. Both nations greatly rely on importing a wide range of materials and components.

Based on the latest evaluation conducted in August 2022, the Canadian energy market has been appraised at a substantial valuation of $9.702 trillion. The chemical sector exhibited a consolidated revenue of $153 million, whereas the plastics and rubber industry demonstrated a significant income of $10.46 billion. The metal ores and concentrates segment made a noteworthy contribution of $100 million to the aggregate revenue, while the petroleum products industry demonstrated a substantial gain of $4.179 billion. During the specified period, Canadian exports showed a valuation of 638.644 trillion CAD, while Canadian imports exhibited 653.833 trillion CAD. The appreciating value of the Canadian currency can be attributed to the excellent trade surplus. Since June 2022, consumer goods prices have demonstrated a persistent downward trajectory, resulting in a cumulative decline of 32.4% in June, followed by a further decrease of 17.6% in August and a marginal reduction of 1.2% in January 2023.

Canada: Commodity Prices
Date	% change YOY
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
Feb-23	-5.2
Mar-23	-16.5
Apr-23	-10.8

In the fiscal year of 2017, Canada encountered a substantial trade deficit of $81.91 billion with India, signifying a notable disparity between the value of imports from India and exports to the nation, with imports surpassing exports by $45.02 billion. The potential devaluation of the Indian rupee could exert upward pressure on prices owing to the nation's substantial dependence on imported commodities.

India: Commodity Prices
Date	Base Points change YOY)
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
Feb-23	176.8
Mar-23	177.2
Apr-23	178.1
May-23	179

During the observed timeframe from August 2022 to May 2023, the Consumer Price Index (CPI) for goods exhibited a substantial surge of 179 percentage points, equivalent to a significant 176.5 percent escalation. The Indian rupee has experienced a considerable devaluation from the Canadian and American dollars.

3. Interest rates

A considerable segment of the Canadian populace expresses concern regarding the potential adverse impact of the ongoing revitalization endeavors on their financial assets. Based on our analysis of current projections, the global economy is expected to grow by 3.5% in 2022, followed by a growth rate of 2.5% in 2023 and, subsequently, a growth rate of 3% in 2024. The Bank of Canada has strategically implemented comprehensive measures to effectively address and alleviate the persistent economic turbulence experienced within the Canadian economy.

The recent decision made by the central bank to increase the interest rate by 100 basis points is predicated upon the underlying belief that a heightened inflation rate will yield advantageous outcomes for the economy, enterprises, and individuals in the long run. According to the central bank's projections, the inflation rate is anticipated to exhibit a downward trend, reaching a level of 2% by 2024. The interest rates have observed a substantial increase of over 100% from their prior trough in June and August of 2022, recorded at 2.5%, to their current level in January of 2023, which stands at 4.5%. The observed uptick can be ascribed to the persistent inflationary predicament.

Canada: Interest Rates
Date	Rate (%)
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
Dec-22	4.5
Jan-23	4.5

In response to the prevailing inflationary pressures witnessed in India, the Reserve Bank of India has opted to implement a strategic interest rate hike. During July and August, the annual percentage rate observed a notable uptick of 50 basis points, culminating in the present rate of 5.4%. The interest rate of 4.9%, implemented in July, is projected to remain unchanged until August 2022. According to the Federal Reserve's forward-looking estimates, interest rates are anticipated to ascend to 6.5% as we approach the conclusion of the current decade. The Indian government has set a target to attain a maximum inflation rate of 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

In the current economic environment, obtaining funding has become increasingly complex due to intensified regulatory scrutiny and enhanced oversight from the private sector. The dynamic nature of interest rates is contingent upon the oscillations observed in diverse economic indicators, including but not limited to inflation and market expectations. As inflationary pressures persist, the purchasing power of consumers is eroded, resulting in a decline in their discretionary income.

4. Inflation rates

Inflation presents a formidable obstacle to global economies, given its profound implications for consumer expenditure trends and currency appreciation. The upward trajectory of costs precipitates a concomitant decline in disposable income available to individuals. The disparate impacts of inflation across various nations have been widely acknowledged and documented. Nevertheless, it is crucial to recognize that the effects of this phenomenon are only partially mitigated in any country.

Canada's current annual inflation rate stands at an impressive 5%, positioning it as one of the highest rates observed globally. In light of the robust regulatory framework in Canada, it is imperative to acknowledge the substantial impact that the COVID-19 pandemic has exerted on the nation's economy. In response to the Bank of Canada's proactive measure of increasing repo rates in June 2022 to address inflationary pressures, the subsequent effect on consumer prices in Canada was observed. Specifically, there was a decline in the consumer price index from 8.1% in June 2022 to 7.6% in July 2022. Additionally, a decline was observed, decreasing to 3.4% as of May 2023. The Canadian economy has been bolstered by the favorable effects stemming from the marked reduction in inflation over the past few months.

Canada: Inflation Rates
Date	Rate (%)
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
Feb-23	5.2
Mar-23	4.3
Apr-23	4.4
May-23	3.4

The inflationary pressures in India have exhibited a consistent upward trajectory since September 2021, leading to an escalation in the overall cost of living. After a lackluster start to the year, the economy experienced a notable upswing in growth and inflation throughout March, April, and May. In the third quarter of 2022, there was a noteworthy uptick in inflation, with an average rise of 4.7%. However, as of May 2023, it has experienced a significant decline, reaching an unprecedented record low of 4.25%.

India: Inflation Rates
Date	Rate (%)
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
Feb-23	6.44
Mar-23	5.66
Apr-23	4.70
May-23	4.25

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

Fluctuations in unemployment rates significantly impact the purchasing power of a nation's currency. The upward trajectory of employment rates, coupled with the strategic expansion of businesses through the recruitment of new personnel, can favorably influence the broader economic landscape. The Canadian unemployment rate observed a slight uptick, rising from 5.1% in November 2022 to 5.2% in May 2023. Although there was a modest decrease in the unemployment rate from October to December, it is essential to note that there is still ample opportunity for enhancement, as additional reductions are required to achieve optimal levels. Furthermore, it is imperative to augment job creation efforts to tackle the prevailing employment scenario effectively. The upward trajectory observed in the labor force participation rate since February 2022 has contributed to reduced domestic investment and inflationary pressures. The upward trend observed in the savings rate has played a pivotal role in fostering a positive trajectory for the economy as a whole.

Canada: Unemployment Rate
Date	Rate (%)
Jul-22	4.9
Aug-22	5.4
Sep-22	5.2
Oct-22	5.2
Nov-22	5.1
Dec-22	5
Jan-23	5
Feb-23	5
Mar-23	5
Apr-23	5
May-23	5.2

The unemployment rate in India witnessed a notable surge in August 2022, with a rise from 6.8% in the preceding month to 8.2%. Based on our comprehensive analysis, the metric above is expected to undergo a downward trajectory, ultimately reaching a level of 6.4% by September 2022. As of May 2023, the unemployment rate was 7.1%. The prevailing economic conditions have led to a decline in consumer sentiment, resulting in a significant contraction in spending and subsequently impeding the inflow of foreign currency. The recruitment initiatives undertaken by multinational corporations (MNCs) have been instrumental in sustaining a favorable unemployment rate in India.

India: Unemployment Rate
Date	Rate (%)
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
Jan-23	7.1
Feb-23	7.5
Mar-23	7.8
Apr-23	8.1
May-23	7.7

6. Budget deficit and national debt levels

Governments, for the most part, have taken on debt with only a limited number of exceptions. Elevated debt levels within a nation can precipitate a devaluation of its currency and a subsequent escalation in its inflationary pressures. In light of the observed deviation of actual spending from the initially planned levels and the consequential effects of inflation on currency valuation, governmental entities strategically formulate a comprehensive budget for the forthcoming fiscal year.

The expenditures incurred by Canada in the first quarter of 2022 were $3.91 billion below the initial projections, resulting in a decline of $59 million in the country's external debt from the fourth quarter of 2022 to the first quarter of 2023. As a result, there has been an increase in the value of the Canadian dollar. Based on our analysis, we project a contraction in Canada's trade surplus from CAD 2,372.7M in July to CAD 40M by November 2022. This anticipated decline can be attributed to the more accelerated growth of exports compared to imports. The resilience exhibited by the Canadian dollar has played a pivotal role in propelling the thriving Canadian economy.

Canada: Balance of Trade
Date	CAD $ Millions
Jun-22	5046.3
Jul-22	2372.7
Aug-22	-2535
Sep-22	8675
Oct-22	4987
Nov-22	-2187
Dec-22	-1595
Jan-23	1204.1
Feb-23	422.3
Mar-23	230
Apr-23	1940

Based on the recently released national budget of India, it is evident that there has been a notable surge in expenditure during the initial quarter of 2022. As of the end of the first quarter, India's external debt amounted to a substantial USD 620 billion. However, it is anticipated that this figure will experience a modest decrease and settle at USD 614 billion by the year's conclusion.

The depreciation of the Indian rupee may have exerted a potential influence on the inflationary forces within the economy. The ongoing trade deficit exhibited by India necessitates careful consideration from a financial standpoint. In May 2023, Canada experienced a trade deficit of C$22.12 million, reflecting a relatively moderate figure. This stands in sharp contrast to India's trade performance, where a significant negative delta was observed during July and August 2022.

India: Balance of Trade
Date	CAD$ Millions
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
Feb-23	17.43
Mar-23	19.7
Apr-23	15.24
May-23	22.12

7. Politics and international policies

The correlation between a nation's currency valuation and the degree of public confidence in its governing institutions is significantly intertwined. The Indian economy has been exhibiting subpar growth, while the rupee has been undergoing depreciation due to multiple grievances directed toward the government. Unfavorable media coverage has negatively influenced the economic performance of both Canada and India.

The Canadian dollar has demonstrated a comparatively robust performance about the Indian and American rupees. The currencies above have exhibited significant volatility in their valuation yet have shown commendable resilience. The Indian rupee has depreciated, while the Canadian dollar has revealed a positive trajectory. Both nations' fiscal authorities are poised to benefit from a currency that demonstrates high stability. Nevertheless, it is imperative to acknowledge that even with meticulous planning, the execution of the process is only assured to materialize intermittently. Based on an analysis of prevailing market trends, it is anticipated that the value of the rupee will exhibit a stable trajectory throughout the year.