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

Key points:

• Canada Dollar to Indian Rupee Exchange Rate Declines.
• The Canadian Central Bank has increased interest rates.
• Interest rates in India are currently at 6.5 percent, with another increase of 25 basis points (bps) expected from the Reserve Bank of India in 2023
• Inflation and Unemployment rates are up in India and Canada.

One Canadian dollar is equivalent to 60 Indian rupees as of April 30, 2023, after having appreciated significantly over the past few years. Recently, the value of one currency relative to another has fluctuated widely, from a high of 61.40 on April 17, 2023, to a low of 59.81 on April 24, 2023. There has been a standard deviation of 0.292 rupees in the trend curve. The recent fluctuations in the exchange rate point to strengthening the Canadian dollar. A product that used to cost between 50 and 55 rupees now costs 60. Overvaluation could result from factors like a foreign capital imbalance and rising petrol prices and demand.

CAD to INR Exchange Rates (1 CAD into INR)
Date	Open	High	Low	Close
Apr 17, 2023	61.30	61.40	61.08	61.20
Apr 18, 2023	61.17	61.35	61.13	61.17
Apr 19, 2023	61.26	61.29	61.04	61.26
Apr 20, 2023	61.08	61.11	60.82	61.08
Apr 21, 2023	60.88	60.90	60.48	60.87
Apr 24, 2023	59.83	60.55	59.83	60.55
Apr 25, 2023	60.51	60.53	60.12	60.51
Apr 26, 2023	60.15	60.17	59.90	60.15
Apr 27, 2023	59.93	60.11	59.83	59.93
Apr 28, 2023	60.07	60.30	59.81	60.07

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 country's large population, roughly 80% of India's annual crude oil requirements are met by this single source. The state of the global economy can be inferred from movements in the price of crude oil. The price was 110.54 CAD on April 17 and 100.54 CAD on April 28, 2023. The passage's overall structure is unclear but may offer cause for optimism. The production, transportation, and sale of crude oil would all benefit from lower prices. The Indian government could increase the value of the rupee by limiting the printing of new notes.

Crude Oil (in CAD)
Date	High (CAD)	Low (CAD)	Close (CAD)
Apr 17, 2023	110.54	107.55	108.03
Apr 18, 2023	109.12	106.96	108.29
Apr 19, 2023	108.71	105.07	106.00
Apr 20, 2023	106.25	103.66	104.09
Apr 21, 2023	105.68	103.43	104.98
Apr 24, 2023	107.19	103.86	106.63
Apr 25, 2023	107.01	103.54	104.31
Apr 26, 2023	106.13	100.84	101.18
Apr 27, 2023	102.61	100.91	101.91
Apr 28, 2023	104.61	100.54	104.42

Like many other countries, Canada places a high value on this commodity. Crude oil sales are usually profitable because the revenue generated exceeds production costs. It's anticipated that by 2022, the market will be even more fruitful. The second quarter of 2022 saw crude oil prices rise to $1,754,000. This is a substantial increase from the initial $1–$1.5 billion production usually brought in. A higher price for crude oil imported into Canada could boost the value of the Canadian dollar.

However, the Indian rupee's value against the Canadian and US dollars will continue to fall.

2. Commodity Prices and Import/Export

It's important to remember that Canadian and Indian consumer spending has a major effect on the value of the Canadian dollar compared to the Indian rupee. The relative economic vigor of the two countries underpins this exchange rate. For instance, both nations have relied on foreign suppliers for various goods, such as metal ores, plastics, rubber, chemicals, and fuels.

In August of 2022, Canadians spent $9.702 trillion on energy products. There was a total value of $4,179,000,000 for petroleum refineries' finished goods, $100,000,000 for metal ores and concentrates, $153,000,000 for chemicals, and $1046,000,000 for plastics and rubber. The value of Canadian exports in that same month was CAD 638,644,000,000,000, while the value of Canadian imports was CAD 653,833,000,000,000. The disparity between Canadian exports and imports bolstered the country's currency. In addition, since June 2022, consumer goods prices have fallen every month, from 32.4% to 17.6% in August 2022 and 1.2% in January 2023.

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

Canada ran a trade deficit with India of $45.02 billion because it imported goods from India worth C$81.91 billion while only exporting goods to India worth $45.02 billion. Since India relies so heavily on imports, a drop in the value of the rupee could cause inflation and price spikes.

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

Goods prices increased by 174.3 percentage points (equivalent to a 176.5 percent increase on a scale from 100) between August 2022 and January 2023 due to inflation. Compared to the United States and the Canadian dollar, the Indian rupee is much weaker.

3. Interest rates

Most Canadians believe that efforts to revitalise the economy will result in further budgetary strain. Growth forecasts for the global economy are 3.5% for 2022, 2% for 2023, and 3% for 2024. The Bank of Canada has introduced several policies to assist Canadians as they ride the current economic storm.

The central bank recently increased the interest rate by 100 basis points, assuming that higher inflation will be good for the economy, businesses, and consumers in the long run. According to the bank's projections, inflation will drop to 2% in 2024. Interest rates have skyrocketed as a result of the rising inflation, increasing by 2 percentage points from 2.5% in June and August 2022 to 4.5% in January 2023.

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

The inflation rate in India has prompted the Reserve Bank of India to raise interest rates. The interest rate increased by 50 basis points in July and August this year, reaching 5.4%. July's rate of 4.9% will carry over into August 2022 at the same rate. The Fed anticipates raising interest rates to 6.5 percent by the decade's end. By 2024, the Indian government hopes to have inflation at or below 3%.

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

It is now more difficult to secure funding due to increased regulation and scrutiny from the government and the private sector. Interest rates are sensitive to changes in inflation and inflation expectations. Individuals' purchasing power decreases as the cost of living rises.

4. Inflation rates

The inflation rate is a major concern in all economies because it affects the purchasing power and stability of the currency. When the cost of living rises, consumers have less disposable income. Although some nations are hit harder than others, no nation is truly safe from inflation.

Price increases in Canada have been particularly steep, at 5% over a year. The COVID-19 pandemic spread to Canada, where strict government regulations made it difficult for businesses to grow. With repo rates increased by the Bank of Canada in June 2022 to fight inflation, consumer prices in Canada fell from 8.1% in June 2022 to 7.6% in July 2022 and 5.2% in February 2023. Canada's economy has been thriving as of late, thanks to falling inflation.

Canada: Inflation Rates
Date	Rate (%)
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
Feb-23	5.2

As of September 2021, the cost of living in India has steadily increased. While growth and prices slowed in early 2022, there was a sharp uptick during March, April, and May. From July to September 2023, inflation climbed to 5.86%, its highest level since February 2023

India: Inflation Rates
Date	Rate (%)
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
Feb-23	6.44
Mar-23	5.66

Since the Indian rupee is in such disrepair, the government and the Reserve Bank of India (RBI) have little choice but to raise prices to combat the rising threat of inflation.

5. Unemployment rate and Job Availability

The rate of unemployment in a country has a significant impact on its currency's worth. The economy thrives when more people are working, and more companies are hiring. The jobless rate in Canada fell from 5.1% in May 2022 to 4.9% in June 2022, but it is projected to increase to 5.4% in August 2022. The unemployment rate fell from October to December, but additional job openings are still required. As more people have entered the labor force since February 2022, domestic investment and inflation have fallen despite the abundance of available jobs. More people are saving money, however, so the economy has improved.

Canada: Unemployment Rate
Date	Rate (%)
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
Jan-23	5
Feb-23	5
Mar-23	5

The unemployment rate in India increased from July (2022) to August (2022) from 6.8% to 8.2%. However, forecasts show that figure will drop to 6.4% by September 2022. The unemployment rate, however, was 7.8% in March of 2023. Worries about the economy have caused people to cut back on spending, which has reduced the influx of foreign currency into the country. Despite this, India has a relatively low unemployment rate due to the hiring practices of multinational corporations.

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

6. Budget deficit and national debt levels

Except for a small number of outliers, most nations have outstanding debt. A country's currency's value and inflation rate can suffer from excessive debt. Governments create a budget for the following fiscal year when actual spending exceeds the planned levels, and inflation reduces the value of money.

In contrast, Canada spent $3.91 billion less than expected during the first three months of 2022, resulting in a $59 million reduction in external debt between the fourth quarter of 2022 and the first quarter of 2023. The Canadian dollar is stronger now because of this. From July's surplus of CAD 2,372.7M to November 2022's projected surplus of CAD 40M, it is clear from the graph that Canada's exports have grown more quickly than imports. The Canadian economy thrives thanks to the stability of the Canadian dollar.

Canada: Balance of Trade
Date	CAD $ Millions
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
Jan-23	1204.1
Feb-23	422.3

The Indian government has increased spending in the first quarter of 2022, according to the country's national budget, published annually in February. At the end of the first quarter, India's external debt was USD 620 billion, projected to fall to $614 billion by the end of 2021.

This has contributed to the fall in the value of the Indian rupee and the subsequent rise in inflation. The trade deficit, which has plagued India for decades, should also be considered. Canada's trade deficit in March 2023 was C$19.7 million, while India's negative delta in July and August 2022 was substantial.

India: Balance of Trade
Date	CAD$ Millions
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
Feb-23	17.43
Mar-23	19.7

7. Politics and international policies

The importance of a country's currency is influenced by the confidence its people have in their government, so the value of a currency can be seen as a barometer of government stability. The Indian government takes heat for various reasons, leading to inconsistent economic growth and a depreciating rupee. Canada and India have both seen their economies suffer due to the media's negative portrayals of these countries.

In contrast to the Indian and American rupees, the Canadian dollar has performed better. Both currencies have experienced extreme swings in value but have ultimately fared well. The value of the Indian rupee has dropped while the Canadian dollar has risen. Although it would be beneficial for the governments of both countries to have a stable currency, even the best-laid plans can be derailed by the unexpected. The value of the rupee is expected to hold steady for the rest of the year.