How a freak trade raised eyebrows

MUMBAI: An apparent freak quote toward the close of the workday put the spotlight on the level of the rupee, which ended Tuesday’s whipsaw session of trading against the US dollar at its lowest in six months.

Just about half an hour before the currency market closed for trading in the commercial nerve-centre of Mumbai, the October-month futures contract spiked to 65:00 a dollar from 65:65 within seconds, dealers said.

“We call it the ‘fat finger’ move. Immediately after that, we could see some aggressive dollar short-selling,” a currency dealer familiar with the matter told ET. “It was quite obvious that the subsequent move was aimed at undoing the unintentional damage.”

Fat finger is referred to unintended inaccurate typing, typically resulting from one finger striking two keys at the same time.

There was a trade punched on a large new-generation stock exchange for about $100 million, an unusual sum of money that many market participants suspected was not from any corporate house but from a state-owned bank.

Separately, the rupee on Tuesday weakened for the fourth consecutive session, hitting a fresh six-month low amid overseas fund outflows, triggered by both domestic and global worries. The rupee lost about 0.4%, or 33 paisa, closing at 65.45 a dollar. The Indian currency had last touched this level on March 23.

During the day’s trading, it seesawed in the range of 65.11-65.45, wider than the usual intra-day range amid suspected intervention by the Reserve Bank of India, dealers said.

The central bank sold dollars across futures, forwards and spot currency markets as some state-owned banks are believed to have executed such trades, dealers said.