The rupee is starting to lose ground vis-à-vis the Dollar again; this just does not make sense. Just because the Turkish Lira is slipping against the Dollar does not mean that the rupee needs to follow suit. India is not affected by the Turkish crisis. Further, India is one of the fastest growing countries in terms of Gross Domestic Product (GDP). Then what could explain this sudden slide, which experts predict could make the rupee slip to Rs.75 to a US Dollar in just four weeks?
Perhaps the clue lies in someone badly wanting to crash the currency exchange ratio. A similar run on the rupee occurred in 2013, when the rupee depreciated by about 10% in just a month’s time. Prof. M D Nalapat had brought this to the attention of the then Manmohan Singh government after which this abruptly stopped. According to the whistleblower based in Singapore, who goes by the name Ken Fong, the National Stock Exchange (NSE) can be easily rigged to manipulate the currency market, especially the USD-INR conversion rate. To understand how, some basics of how exchange rates of currency pairs (e. g. USD INR) are set must be understood:
- Any foreign exchange (FX) trader the world over relies on Reuters Dealing 3000 (also called D2) to get the latest exchange rate.
- This D2 feed is then delayed a bit and sent to Non-Banking Corporates. Let us time stamp this as D3.
- A further 2 seconds later, the feed is made available to the general public and to all trading firms (D4). Thus D4 = D3 + 2. For more, see Figure 1.
This is where things get interesting… According to the whistleblower, some Global firms such as Tower Capital, owned through a Mauritius firm by a US firm Tower Research, got D2 feeds in the US and then would send this data using electronic means to its Indian company, thereby gaining a handy lead of up to 2 seconds over others (see Figure 2). This is akin to getting the question paper a day ahead of the exam!
There is one more violation of law here, according to the whistleblower – he claims that firms like Tower run their algorithms on Indian markets, sitting outside of India. This is not permitted, according to India’s laws. Indian firms are not permitted to operate their algorithms from outside of India. Further such companies bypass the Direct Market Access (DMA) delays also since they use their own dedicated lines.
There maybe other firms too…
The whistleblower gives a way for the Securities Exchange Board of India (SEBI) to confirm that this indeed is happening. This letter was sent in February 2017, almost 18 months ago. SEBI should have the results of its findings by now. The entire letter addressed to the SEBI Chairman is shown below: (Thanks to MoneyLife.in for the Scribd link)
 Anatomy of a Crime P4 – Who benefited from the HFT scam? – Oct 4, 2017, PGurus.com
 Inside information behind the collapse of the Rupee – Aug 24, 2013, The Sunday Guardian
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