Key points:
- The CAD to INR exchange rate is down.
- Bank of Canada has increased the interest rates to 3.75% .
- Unemployment and inflation rates have increased in India.
In the last five years, the exchange rate between Canadian dollars and Indian rupees has increased steadily. One Canadian dollar is worth 60.03 Indian rupees as of November 30, 2022. The price went as high as 61.40 on November 16, 2022. Still, on November 29, 2022, 59.78 was the lowest. One Canadian dollar is worth an average of 60.81 Indian rupees. The trend curve has been over the place in the last two weeks, with a standard deviation of 0.169 rupees. Changes in exchange rates show that some of the value of the Canadian dollar has come back. More than 60 rupees will be worth the money. Something that used to cost between 50 and 55 rupees now costs 60. A strong currency, a trade and foreign capital imbalance, and higher gas prices could all be to blame.
- Crude Oil
- Commodity Prices and Import/Export
- Interest rates
- Inflation rates
- Unemployment rate and Job Availability
- Budget deficit and national debt levels
- Politics and international policies
1. Crude Oil
Canada also has a lot of riding on crude oil. Most of the time, they sell more crude oil than they bring in. But in 2022, they will likely import more than they do now. In the second quarter of 2022, they brought in crude oil worth CAD 1,754,000,000. It is often between $1 billion and $1.5 billion, which is much more than what they made at first. Since the price of crude oil brought in from other countries is rising, the Canadian dollar might do well against the US dollar.
On the other hand, the difference between how the Indian dollar and the Canadian dollar did against the US dollar suggests that the value of the rupee against the CAD may continue to fall.
2. Commodity Prices and Import/Export
Both India and Canada have bought things from other countries. These goods include metal ores and minerals, refined petroleum products, goods made of plastic and rubber, chemicals, energy products, and more. Because the overall trade deficit affects how the currency does against the US dollar, the above factors significantly affect the CAD-INR exchange rate.
In August 2022, Canada spent 9,702 million Canadian dollars on energy products. It also spent 1046 million Canadian dollars on plastic and rubber products, 1553 million Canadian dollars on chemicals, 1007 million Canadian dollars on metal ores and concentrates, and 4179 million Canadian dollars on refined petroleum products. In August 2022, Canada earned a total of 63864,000,000 CAD and spent a total of 65383,000,000 CAD. The fact that the Canadian dollar is strong against the US dollar shows that exports and imports are different in a good way. Aside from that, prices have decreased from 32.4% in June 2022 to 17.6% in August 2022 and 9% in October 2022.
India sent the same kinds of goods. The value of everything India sent to Canada was 81.91 billion Canadian dollars. But India only sent out 45,02 billion Canadian dollars worth of goods. This significant difference between what India buys and what it sells has led to a low GDP, which has caused inflation and made the Indian rupee worth less.
Prices of goods change because of inflation. From 174.3 basis points in August 2022 to 176.7 basis points in October 2022, goods prices have increased significantly. It shows that the Indian rupee isn't doing well compared to the US and Canadian dollar.
3. Interest rates
People in Canada think that prices will go up. They also hope it will cost more to get the economy back on track. The world economy is expected to grow by 3.5% in 2022, 2% in 2023, and 3% in 2024. The Bank of Canada has taken steps to help Canadians deal with the effects of their country's poor economy.
One time was when interest rates went up by 100 basis points. When the more significant effects of rising inflation rates are considered, the bank thinks this will help consumers, businesses, and people. By 2024, they want inflation to be at most 2%. As of March 2022, interest rates will go up sharply as inflation rates go up. The rate went up 0.75 percentage points, from 2.5% in June and August 2022 to 3.75% in October 2022.
People find it harder to get money from the government or private institutions. Inflation has a direct effect on the value of a currency, and interest rates have a direct impact on inflation. Money is worth less when prices go up.
4. Inflation rates
The inflation rate shows how well and how much money is worth. Money is worth less when prices go up. Almost every economy is having trouble with inflation right now. The effects hurt some countries, but others can handle them.
Canada's inflation rate has also gone up a lot. In one year, the rate of inflation went up by 5%. Canada was one of the places where the coronavirus outbreak hurt the most. The government's rules were so strict that factories couldn't grow, which was terrible. The fact that inflation rates are going up shows it. Even though the Bank of Canada raised repo rates in June 2022 to fight inflation, the inflation rate has gone down from 8.1% in June 2022 to 7.6% in July 2022 and 6.9% in October 2022. Canada's economy is doing well now that inflation has gone down.
India's prices have been going up since September 2021. At the beginning of 2022, growth seemed to slow, but inflation rates shot up in March, April, and May. After declining in July 2022, inflation rates went up from 6.71% to 7.41% in September 2022. But it has gone down to 6.7% in October 2022.
It looks like inflationary pressures are rising, which is not a good sign. The way the currency is doing shows that the Reserve Bank of India (RBI) and the Indian government don't seem to be able to control inflation.
5. Unemployment rate and Job Availability
The number of jobs and the unemployment rate affect the currency, but not in a direct way. The economy is getting better because there are more jobs and more people have jobs. In June 2022, Canada's unemployment rate was 4.9%, down from 5.1% in May 2022. But the rates went up to 5.4% in August 2022. Even though it went down by 0.2% from September to October, people still need to be able to find jobs more efficiently. It means that there are more people getting jobs. Since February 2022, there have been a lot of job openings. But lately, it has been going down. When more people have jobs and money to spend, domestic investment and inflation will decrease. Things get better, and people save money.
India's unemployment rate, on the other hand, has gone up from 6.8% in July 2022 to 8.2% in August 2022. Still, the unemployment rate went down significantly in September 2022, when it went down to 6.4%. But it has gone up to 7.7% in October 2022. Fear and uncertainty have made people less able to buy things, which has led to less investment in the country. Several international companies in India have removed hiring restrictions, which may be why the unemployment rate is so low.
6. Budget deficit and national debt levels
Nearly every country owes money. Even though these are fair duties, more debt causes inflation, which lowers the currency's value. In the same way, the government proposes its budget for the next fiscal year when actual spending goes over budget and inflation goes up, which makes money worth less.
Canada spent $3.91 billion less than it had planned in the first quarter. Their foreign debt went down from $USD 2.59 billion in the fourth quarter of 2021 to $ 2.49 billion in the first quarter of 2022. Because of this, the Canadian dollar is now worth more. The graph below shows that Canada usually sells more than it buys. Imports went over exports for the first time in December 2021. Through 2022, the country has kept a positive delta. The difference was CAD 2,372.7M in July and CAD 1,519M in August 2022. In this way, the Canadian dollar's strength is shown by how well Canada does
India's union budget, on the other hand, is always released in February. In the first three months of 2022, India spent USD 13.4 billion more than planned. India owed other countries USD 620 billion at the end of the first quarter of 2022. It went up after the fourth quarter of 2021 when it was worth USD 614 billion. It has worsened the country's inflation, hurting the rupee's value.
Another thing to think about is the trade balance. India has never sold more than it bought. India had a significant negative delta in July and August of 2022. By September 2022, it was worth 19.33 CAD M less than it had been.
7. Politics and international policies
A country's money is also affected by how stable its government is. If the government is less stable, there will be more rallies and protests against it, less foreign investment, and the currency will be worth less. People in India have recently been very harsh on their government for many different reasons, like religion, taxes, the instability of political parties, etc. Because of this, only a few parts of the country are doing well. The growth of the Indian rupee has been all over the place, which has caused it to lose value.
Many bad things have been said about both Canada and India. Because of this, the value of both currencies has gone down. The US dollar and the Indian rupee, on the other hand, have done worse than Canada.
Both currencies have been unstable, so neither has done well yet. On the other hand, the Canadian dollar has done a lot better than the Indian rupee. Both coins could have done better than the US dollar. The Canadian dollar has done much better than most other currencies. Even though both governments work to support their currencies, things sometimes go differently than planned. The value of the rupee is likely to go down even more before it starts going up again at the start of the following year.
Google Source: CAD to INR exchange rate down
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