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

Key points:

• Canada Dollar to Indian Rupee Exchange Rate decreases.
• The Bank of Canada has strategically executed a monetary policy action by implementing a rate hike, thereby augmenting the prevailing interest rates.
• Based on our meticulous examination of the financial landscape, it is anticipated that the interest rates prevailing in the Indian market are positioned to experience a significant upturn of 25 basis points by the year 2023.
• The expected upward trend will lead to a corresponding modification of the 6.5 percent rate, in line with the projected benchmark. The Indian and Canadian economies have witnessed a notable upsurge in inflation and unemployment rates during recent periods.

Based on the financial data as of July 31, 2023, it is apparent that the Canadian dollar has demonstrated a positive trend in its valuation relative to the Indian rupee. The prevailing exchange rate of 1 Canadian Dollar (CAD) to 60 Indian Rupees (INR) substantiates this statement. The observed appreciation can be attributed to the sustained and favorable trajectory in the Canadian dollar's valuation over time. In the latter half of July 2023, the exchange rate between the two currencies exhibited significant volatility, fluctuating between a high of 62.50 and a low of 61.25. According to our comprehensive analysis, the computed standard deviation of the trend curve equates to 0.135 rupees. The Canadian dollar has experienced a notable appreciation in response to recent fluctuations in the exchange rate. The product has significantly devalued, plummeting from 65 rupees to a mere 60 rupees. The potential for asset overvaluation can 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
Jul 17, 2023	62.0347	62.2921	61.4022	62.0512
Jul 18, 2023	62.0957	62.2397	61.9258	62.1047
Jul 19, 2023	62.2764	62.338	62.168	62.2764
Jul 20, 2023	62.2844	62.4684	62.142	62.2785
Jul 21, 2023	62.2357	62.2943	61.9508	62.2414
Jul 24, 2023	61.3422	62.1556	61.3124	61.3422
Jul 25, 2023	62.0463	62.176	61.9239	62.0404
Jul 26, 2023	62.0189	62.1823	61.93	62.016
Jul 27, 2023	62.0135	62.2696	62.0074	62.0023
Jul 28, 2023	62.0532	62.1916	62.0273	62.0491
Jul 31, 2023	61.2554	62.4957	61.2544	61.2554

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

Considering the substantial scale of the nation's populace, it is worth mentioning that this specific supplier can meet approximately 80% of India's annual crude oil demand. The dynamic price fluctuations witnessed in the global oil market are a reliable barometer of the global economy's broader economic well-being and stability. The security experienced a decline in its valuation, decreasing from 111.14 CAD on July 31, 2023, to 100.12 CAD on July 17, 2023. The passage demonstrates significant potential for improvement in its structural composition and its substance. The projected decline in crude oil prices is expected to create a conducive atmosphere for various sectors within the industry, such as extraction, distribution, and retail. One potential approach for 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)
Jul 17, 2023	103.17	100.12	100.54
Jul 18, 2023	102.94	100.12	102.66
Jul 19, 2023	104.83	102.25	102.63
Jul 20, 2023	103.81	101.86	103.10
Jul 21, 2023	104.52	102.36	104.22
Jul 24, 2023	106.08	102.28	105.35
Jul 25, 2023	106.84	104.69	106.48
Jul 26, 2023	106.69	105.06	105.37
Jul 27, 2023	107.78	105.46	107.10
Jul 28, 2023	108.90	106.69	108.73
Jul 31, 2023	111.14	108.61	110.87

This particular asset exhibits substantial intrinsic value in Canadian and global markets. The profitability of crude oil sales generally surpasses the corresponding production expenses. Our meticulous examination shows that the market is primed for a significant growth trajectory and is expected to experience a substantial upswing in profitability by the year 2023. During the second quarter of 2022, the market value of crude oil witnessed a considerable upswing, resulting in a remarkable price surge to an impressive $1,754,000 per barrel. The observed wave displays a notable deviation from the mean initial annual yield, typically within the $1 to $1.5 billion range. The Canadian dollar exhibits a promising outlook for appreciation due to heightened expenditures on imported crude oil.

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

2. Commodity Prices and Import/Export

Consumer preferences significantly influence the exchange rate dynamics between the Canadian dollar and the Indian rupee in Canada and India. This dynamic relationship results in notable fluctuations in the exchange rate. The exchange rate determination was predicated upon a comprehensive assessment of the relative economic prowess exhibited by both countries. Both nations demonstrate a notable reliance on importing a wide range of materials and components, indicating a substantial interdependence on external sources for their supply chains.

Based on the latest assessment conducted in August 2022, the valuation of the Canadian energy market stands at an impressive $9.702 trillion. The chemical sector exhibited a consolidated revenue of $153 million, indicating a moderate performance. On the other hand, the plastics and rubber industry displayed a significant income of $10.46 billion, highlighting a robust financial outcome. The metal ores and concentrates segment made a noteworthy contribution of $100 million to the total revenue, whereas the petroleum products industry demonstrated a substantial growth of $4.179 billion. During the specified period, Canadian exports exhibited a valuation of 638.644 trillion CAD, while Canadian imports showcased a marginally higher figure of 653.833 trillion CAD. The Canadian currency has witnessed a significant appreciation, primarily driven by the exceptional trade surplus. Since June 2022, there has been a persistent and notable decline in the prices of consumer goods. The observed pattern has resulted in a sequential downturn of 32.4% in June, followed by a subsequent reduction of 17.6% in August and a marginal contraction of 1.2% in January 2023.

Canada: Commodity Prices
Date	% change YOY
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
May-23	-18.4
Jun-23	-19.7

In the fiscal year of 2017, Canada encountered a substantial trade deficit of $81.91 billion with India, signifying a notable disparity between the import value from India and the export value to the country. This discrepancy resulted in imports surpassing exports by $45.02 billion. The potential devaluation of the Indian rupee could potentially result in upward price pressures, primarily driven by the substantial dependence on imported commodities within the nation.

India: Commodity Prices
Date	Base Points change YOY)
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
Jun-23	180.1

During the observed timeframe from August 2022 to May 2023, there was a significant upward trend in the Consumer Price Index (CPI) for goods. This surge amounted to an increase of 180.1 percentage points, reflecting a substantial escalation of 176.5 percent. The Indian rupee has experienced a significant devaluation of both the Canadian and American dollars.

3. Interest rates

A considerable segment of the Canadian populace expresses concerns regarding the potential adverse implications of the ongoing revitalization endeavors on their financial portfolios. Based on our meticulous examination of prevailing forecasts, the global economy is expected to demonstrate a growth rate of 3.5% in the forthcoming year of 2022. The projected trajectory entails a subsequent growth rate of 2.5% in 2023, followed by a further growth rate of 3% in the next year of 2024. The Bank of Canada has strategically implemented various comprehensive measures to effectively address and mitigate the persistent economic turbulence observed within the Canadian economy.

The recent decision by the central bank to implement a 100 basis point increase in the interest rate stems from the anticipation that an elevated inflation rate will yield favorable outcomes for the economy, corporate entities, and individuals in the foreseeable future. Based on the forward-looking estimates furnished by the central bank, the inflation rate is anticipated to exhibit a downward trend, culminating in a convergence towards a 2% threshold by 2024. The interest rates have witnessed a substantial surge of over 100% after reaching their nadir in June and August of 2022, where they were registered at 2.5%. As of January 2023, the prevailing interest rates were recorded at 4.5%. The observed upward trend can be attributed to the overall inflationary environment.

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

Given the current inflationary pressures witnessed in India, the prudent course of action taken by the Reserve Bank of India involves the strategic implementation of an interest rate hike. During July and August, a notable uptick of 50 basis points was observed in the annual percentage rate, leading to the present rate of 5.4%. The current interest rate of 4.9%, implemented in July, is expected to remain unchanged until August 2022. Based on the forward-looking estimates provided by the Federal Reserve, interest rates are anticipated to undergo a gradual ascent, culminating in a level of 6.5% as we approach the conclusion of the present decade. The Indian government has set an ambitious target of attaining a pinnacle 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, securing funding has become increasingly complex due to heightened regulatory scrutiny and increased oversight from the private sector. The dynamic behavior of interest rates is contingent upon the oscillations witnessed in diverse economic indicators, including inflation and market sentiment. In light of the persistent inflationary pressures, consumers are currently grappling with gradually diminishing their purchasing power, resulting in a discernible decline in their disposable income.

4. Inflation rates

Inflation presents a formidable obstacle to the global economy as it exerts wide-ranging effects on consumer expenditure trends and currency valuations. The persistent upward trajectory of expenses results in a commensurate decline in the disposable income available to individuals. The well-established and extensively studied phenomenon of inflation's differential effects on countries has attracted considerable scrutiny. Nevertheless, it is crucial to acknowledge that this phenomenon's ramifications are mitigated to a certain extent in each nation.

Canada's annual inflation rate stands at an impressive 5%, among the highest worldwide rates. In light of Canada's robust regulatory framework, it is imperative to acknowledge the profound impact that the COVID-19 pandemic has exerted on the nation's economic landscape. In light of the Bank of Canada's prudent decision to increase repo rates in June 2022 as a preemptive measure to address inflationary pressures, we have observed the subsequent effects on consumer prices within the Canadian economy. The consumer price index significantly declined, notably from 8.1% in June 2022 to 7.6% in July 2022. Additionally, it is worth mentioning that a substantial decrease has been observed, leading to a reduction of 2.8% as of June 2023. The Canadian economy has witnessed a considerable upswing due to the favorable effects stemming from a noteworthy decline in inflation over the past few months.

Canada: Inflation Rates
Date	Rate (%)
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
Jun-23	2.8

The Indian economy has experienced a sustained upward trajectory in inflationary pressures since September 2021, escalating 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, it is noteworthy to highlight a significant inflation surge, demonstrating an average upward trajectory of 4.7%. As of June 2023, the entity above has experienced a considerable decline, reaching an unprecedented milestone of 4.81% that has not been observed previously.

India: Inflation Rates
Date	Rate (%)
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
Jun-23	4.81

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

The observed volatility in the unemployment rates significantly impacts the purchasing power of a nation's currency. The upward trajectory followed in employment rates and the astute expansion strategies businesses employ through acquiring new talent holds promising implications for the overall economic landscape. The Canadian labor market observed a slight uptick in the unemployment rate, rising from 5.1% in November 2022 to 5.3% in June 2023. Although there was a modest decrease in the unemployment rate from October to December, it is crucial to recognize that there is still considerable scope for enhancement, as additional reductions are required to attain optimal levels. Furthermore, it is imperative to prioritize efforts to bolster job creation to tackle the prevailing employment landscape effectively. Since February 2022, there has been a significant upward trajectory in the labor force participation rate, resulting in a positive impact on domestic investment levels and a reduction in inflationary pressures. The remarkable surge in the savings rate has played a pivotal role in fostering a positive trajectory for the broader economy.

Canada: Unemployment Rate
Date	Rate (%)
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
Jun-23	5.3

In August 2022, the unemployment rate in India witnessed a substantial surge, exhibiting a noteworthy rise from the preceding month's figure of 6.8% to 8.2%. Based on our comprehensive analysis, it is projected that the metric above will undergo a gradual decline, ultimately reaching a convergence point of 6.4% by September 2022. As of May 2023, the unemployment rate exhibited a value of 7.1%, which indicates the prevailing labor market dynamics. The general economic conditions have instigated a decline in consumer sentiment, resulting in a significant decrease in spending and subsequently impeding the inflow of foreign currency. The strategic recruitment initiatives executed by multinational corporations (MNCs) have significantly contributed to maintaining 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, mostly, have taken on debt with only a handful of notable outliers. The presence of heightened debt levels within a nation possesses the capacity to initiate a devaluation of its currency, thereby resulting in a subsequent escalation of inflationary forces. Based on the discrepancy observed between the actual expenditure and the initially projected levels and the influence of inflation on the currency's value, governmental entities adopt a strategic methodology to formulate a comprehensive budget for the forthcoming fiscal year.

Canada's expenditures during the initial quarter of 2022 failed to meet the initial projections, resulting in a shortfall of $3.91 billion. Consequently, $59 million in the nation's external debt declined from the fourth quarter of 2022 to the first quarter of 2023. As a result, the Canadian dollar has exhibited a positive trajectory of appreciation. Based on our thorough examination, it is expected that Canada's trade surplus will undergo a significant decrease, shifting from CAD 2,372.7 million in July to an estimated CAD 40 million by November 2022. The anticipated decline can be attributed to the comparatively faster export growth rate than imports. The commendable strength exhibited by the Canadian dollar has played a pivotal role in propelling the thriving Canadian economy.

Canada: Balance of Trade
Date	CAD $ Millions
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
May-23	-3439

After a meticulous examination of India's recently disclosed national budget, it becomes evident that there has been a noticeable increase in expenditures during the first quarter of 2022. At the close of the first quarter, India's external debt surged to USD 620 billion. Based on the prevailing forecasts, this specific metric is anticipated to experience a modest downturn and subsequently stabilize at around USD 614 billion by the conclusion of the fiscal year.

The depreciation of the Indian rupee may have influenced the inflationary forces prevalent in the economy. The ongoing trade deficit witnessed in India necessitates a reasonable assessment from a financial standpoint. In June 2023, Canada experienced a trade deficit of C$20.13 million, reflecting a relatively modest performance. The trade performance of India experienced a significant decline in July and August 2022, as indicated by a substantial negative delta.

India: Balance of Trade
Date	CAD$ Millions
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
Jun-23	20.13

7. Politics and international policies

The correlation between a nation's currency valuation and public confidence in its governing institutions holds substantial importance. The Indian economy has been witnessing subpar growth, coupled with a devaluation of the rupee, primarily ascribed to various grievances targeted at the government. Unfavorable media coverage has negatively influenced the economic performance of both Canada and India

The Canadian dollar has demonstrated a relatively robust performance about the Indian and American rupees. The currencies above have exhibited significant fluctuations in their value yet have exhibited admirable resilience. The Indian rupee has depreciated, while the Canadian dollar has shown a positive and promising upward trajectory. Both countries' fiscal authorities have the potential to benefit from a currency that demonstrates a strong inclination toward stability. Nevertheless, it is imperative to acknowledge that notwithstanding meticulous planning, the execution of the process above can only be assured to transpire intermittently. Based on a thorough assessment of the prevailing market dynamics, the rupee's valuation is anticipated to exhibit a persistent and stable trajectory throughout the year.