Why is the CAD to INR Exchange Rate Down today on 13th January 2023 (1st half of January 2023)?

Key points:

• The CAD to INR exchange rate is down.
• The Bank of Canada has raised interest rates.
• The Reserve Bank of India has increased the interest rates to 6.5%.
• Inflation and Unemployment rates have increased in India and Canada. Inflation and Unemployment rates have increased in India and Canada.

In comparison to the Indian rupee, the value of one Canadian dollar has steadily gone up over the past five years. As of November 30, 2022, one Canadian dollar is worth 69 Indian rupees. On January 9, 2023, the year's high point was 61.57. But on the same day, it was at its lowest with a reading of 59.88. At the moment, one Canadian dollar is worth about 60.81 Indian rupees. The trend curve has been volatile over the past two weeks, with a standard deviation of 0.152 rupees. Recent changes in exchange rates show that the Canadian dollar's value has increased. It makes sense to pay sixty rupees or more. Before, this item cost between 50 and 55 rupees. Now, it costs $60. A currency worth more than it should be, trade, an imbalance in foreign capital, and rising gas prices could all be to blame.

CAD to INR Exchange Rates (1 CAD into INR)
Date	Open	High	Low	Close
Jan 02, 2023	60.21	61.06	60.21	61.02
Jan 03, 2023	60.98	61.16	60.50	60.99
Jan 04, 2023	60.49	61.28	60.48	60.48
Jan 05, 2023	61.23	61.27	60.70	61.25
Jan 06, 2023	60.83	61.33	60.51	60.84
Jan 09, 2023	59.88	61.57	59.88	61.14
Jan 10, 2023	61.30	61.41	60.67	61.30
Jan 11, 2023	60.72	60.89	60.63	60.72
Jan 12, 2023	60.71	60.96	60.46	60.71
Jan 13, 2023	60.58	61.00	60.45	60.58

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 lot of people. About 80% of India's crude oil needs are met by what it brings. The changing price of crude oil shows that the world economy has changed significantly. The price went as high as C$110.25 on January 3, 2023. Looking at the trend line, you can see that prices have gone up and down since November 16, 2022. On January 6, 2023, the price fell to 99.48 Canadian dollars. Even though one could read it optimistically, the fact that it changes over time makes it less reliable.

If the price of crude oil went down, it would be cheaper and easier to make, ship, and sell. If the government slows down how much money it prints, the value of the Indian rupee could go up

Crude Oil (in CAD)
Date	High (CAD)	Low (CAD)	Close (CAD)
Jan 03, 2023	110.25	103.62	104.07
Jan 04, 2023	104.97	98.61	98.76
Jan 05, 2023	102.45	99.08	100.74
Jan 06, 2023	101.77	98.76	99.48
Jan 09, 2023	104.06	99.63	101.20
Jan 10, 2023	102.00	99.20	100.92
Jan 11, 2023	104.56	99.82	103.98
Jan 12, 2023	106.31	103.55	105.28
Jan 13, 2023	107.16	104.29	106.82

Canada, too, depends a lot on crude oil. Most of the time, the money made from selling crude oil is more than it costs. But they are expected to bring in even more than they do by 2022. In the second quarter of 2022, they brought in crude oil worth $1,754,000.00 in Canadian dollars. It is usually between $1 billion and $1.5 billion, a lot of money compared to what they made initially. If the price of imported crude oil goes up, it could help the value of the Canadian dollar against the US dollar.

But the Indian rupee's weakness against the Canadian and US dollar suggests it will continue to lose value.

2. Commodity Prices and Import/Export

Both Canada and India have bought things from other countries. There are many different things in this category, such as minerals and metal ores, petroleum products, plastics and rubber, chemicals, energy sources, and more. The items listed above significantly affect the CAD/INR exchange rate. The reason is that the currency's value affects how well the country's economy does.

In August 2022, Canada spent $9,702 billion on energy-related products. Add 1046 million Canadian dollars for plastics and rubber, 1553 million for chemicals, 1007 million for metal ores and concentrates, and 4179 million for finished petroleum products. Canada made a total of CAD 638,644,000,000,000 in August 2022 and spent a total of CAD 653,833,000,000,000. The fact that the Canadian dollar is stronger than the US dollar shows that Canada's exports and imports are different in good ways. But costs have decreased since June 2022, dropping by 32.4% to 17.6% by August 2022 and 8% by November 2022.

Canada: Commodity Prices
Date	% change YOY
Dec-21	29.3
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	8

Also, these things were sent from India. India sent a total of C$81.91 billion worth of goods to Canada. But India only sent 45.02 billion Canadian dollars worth of goods abroad. The a big difference between what India buys and what it sells. It leads to inflation and a drop in the value of the rupee.

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

Prices change when inflation comes into play. Goods prices have significantly increased from August 2022 (174.3 basis points) to December 2022 (175.7 basis points). Compared to the US dollar and the Canadian dollar, the Indian rupee is doing poorly.

3. Interest rates

Most people in Canada think that prices will continue to go up. They also expect that getting the economy back on track will cost more. People believe the world economy will grow by 3.5% in 2022, 2% in 2023, and 3% in 2024. The Bank of Canada has done the following things to help Canadians deal with the country's bad economy.

One example is the recent rise of 100 basis points in interest rates. When the more significant effects of rising inflation rates are considered, the central bank thinks this is good for people, businesses, and consumers. They want it to be at most 2% by 2024. Since inflation is worsening, interest rates will go up significantly in March 2022. The rate went up by 0.75 percentage points, from 2.5% in June and August 2022 to 4.25% in November 2022.

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

So, the Reserve Bank of India did the same thing. Fifty basis points raised the rate by the Reserve Bank of India. Rates in June 2022 were 4.9%, while in July and August 2018 were 5.4%. Interest rates had reached 6.5% by December 2022. India wants its inflation rate to be 3% or less by 2024. Right now, it is 6

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

Government and private institutions have made it harder to get money by making it harder to earn money. Interest rates change right away when inflation does, and vice versa. As prices go up, the buying power of money goes down.

4. Inflation rates

How stable and valuable money is can be measured by the inflation rate. As prices go up, the buying power of money goes down. Almost every economy is having trouble right now with inflation. Some countries will feel the effects, but others will be able to stay safe.

The inflation rate in Canada has also gone up a lot. In just one year, prices went up by 5%. Canada was one of the places where the coronavirus pandemic hurt the most. Unfortunately, the government's rules stopped factories from growing, becoming more apparent as inflation rates rose. After the Bank of Canada raised repo rates to fight inflation, prices in Canada went down from 8.1% in June 2022 to 7.6% in July 2022 and 6.8% in November 2022. Since inflation has been going down, Canada's economy has been doing well.

Canada: Inflation Rates
Date	Rate (%)
Dec-21	4.8
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

Since September 2021, the prices in India have been steadily going up. Even though growth seemed to slow at the start of 2022, prices went through the roof in March, April, and May of that year. Inflation rates went up from July to September 2022 and hit a low of 5.72 percent in December 2022.

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

The trend of rising inflationary pressures is a cause for concern. India's government and the Reserve Bank of India (RBI) cannot stop inflation based on how their currency is doing.

5. Unemployment rate and Job Availability

The number of available jobs and the number of unemployed people indirectly affect the value of a country's currency. As more people can find jobs and more businesses can hire people, the economy is getting better. Canada's unemployment rate dropped from 5.1% in May 2022 to 4.9% in June 2022. But in August 2022, the rates went up to 5.4%. Even though unemployment dropped by 0.2% from October to December, that doesn't change the fact that people still need better job opportunities. It looks suitable for the job market in general. Since February 2022, there have been a lot of new job opportunities. Yet it's been declining for some time. When more people have jobs and money to spend, domestic investment and inflation drop. Because people are saving more, things are getting better.

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

However, India's unemployment rate rose from 6.8% in July 2022 to 8.2% in August of the same year. Despite this, the unemployment rate is expected to fall dramatically to 6.4% in September 2022. In comparison, it was 8.3 percent in December 2022. People are spending less money because they are concerned about the future. It means that fewer foreign funds are investing in the country. The low unemployment rate in India may be due to the relaxation of hiring policies by several multinational corporations.

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

Except for a few countries, all are debt-free. These are reasonable expenses, but increasing debt leads to inflation, which devalues the currency. When actual spending exceeds budgeted levels and inflation reduces the purchasing power of money, the government responds by proposing a budget for the following fiscal year.

Canada spent $3.91 billion less than expected in the year's first three months. Their external debt fell from $ 2.59 billion in Q4 2021 to $ 2.49 billion in Q1 2022. As a result, the Canadian dollar's value has risen. The graph below shows that Canadian exports consistently outnumber imports. In December 2021, imports surpassed exports for the first time. In the country, a positive delta is maintained until 2022. In July, the difference was CAD$2,372.7M, with a debt of CAD$40M due in November 2022. One can deduce the success of the Canadian dollar from the country's economic performance.

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

The Indian national budget, on the other hand, is always released in February. India spent an additional USD 13.4 billion in the first three months of 2022 compared to its budget. By the end of the first quarter of 2022, India's foreign debt stood at USD 620 billion. After the fourth quarter of 2021, its value increased to USD 614 billion. As a result, the value of the rupee has fallen, and inflation has risen.

It would also be preferable if you considered the trade deficit. India has never had a positive trade balance (income minus expenditures). In July and August of 2022, India experienced a significant negative delta. The value of the November 2022 trade balance was 15.3 CAD M.

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

The currency of a country is affected by how stable its government is. When people don't trust the government, the value of money and the number of protests against the government go down. Indians have been very critical of their government lately because of many things, such as the country's different religions, high taxes, unstable political parties, etc. Because of this, only a few parts of the country are doing well. The value of the Indian rupee has gone down because economic growth hasn't been steady.

Both Canada and India have gotten a lot of bad press. Because of this, the value of both currencies has gone down. The Canadian dollar has done better than the Indian and US rupee.

Both currencies have done well because they are not stable. The Canadian dollar, on the other hand, has done much better than the Indian rupee. Both of these coins are not as good as the US dollar. Most other currencies have done worse than the Canadian dollar. Both governments want to keep their currencies strong, but unplanned events can wrench their plans. The value of the rupee is likely to keep going down until the new year when it will start to go up again.