The Indian rupee plunging to a life-time low of ₹83.33 against the US dollar may partly be on account of massive volatility caused by an outage in Refinitiv, an electronic trading platform authorised to offer forex products.
Refinitiv is a subsidiary of LSEG or London Stock Exchange Group. It is among the five non-bank entities authorised by the RBI to operate electronic trading platforms for spot foreign exchange market.
According to highly placed sources, the platform witnessed an outage of about 10 minutes on Friday noon (November 10). The brief outage is said to have caused disruptions in the currency market, and this has triggered the central bank to investigate the matter. According to highly placed sources, many market participants were unable to log in to the platform, which led to orders and volume drying up on the trading terminal.
This incident in turn created uncertainty in the money market, causing avoidable excess volatility in rupee movements. The rupee opened at Rs 83.28 against the US dollar on Friday and touched a high of ₹83.49 during intraday trading. With possible intervention from the central bank, the rupee closed at Rs 83.33 against the US dollar on Friday.
Central bank scrutiny
According to highly placed sources aware of the matter, the Reserve Bank of India has asked for an explanation from Refinitiv. “The regulator has called for information to gauge the circumstances for disruption and whether standard operating procedures (SOP) on business continuity processes were triggered or not”. Apparently, the regulator has also asked for a root-cause analysis to be undertaken by Refinitiv. “This is to ascertain whether the disruption was caused by a system failure or human error,” said the source quoted above.