As possible manipulation in worldwide forex markets face a global regulatory probe, trades conducted in Indian rupee along with a host of currencies by such manipulators have come under the scanner.
Those suspected to be involved in possible manipulations include some forex traders, as also certain Swiss banks and other European financial institutions, while it is unlikely as yet that any Indian bank or financial services firm might be directly involved, sources said.
The issues being probed include possible cartelisation among banks, mostly from Switzerland and some other European countries, in manipulating the foreign exchange rates, as also other manipulative practices adopted by the forex traders.
In most likelihood, the possible manipulation in rupee trades might have taken place outside India, although the role of certain executives at Indian branches of suspected European banks might not be completely ruled out, they added.
Globally, the foreign exchange market is of huge size with daily average turnover of USD 5.3 trillion, as per the Bank of International Settlement (BIS).
While rupee trades account for just about 1 per cent of the global market with a daily average turnover of just about USD 53 billion, nearly half of these trades take place outside India and in jurisdictions outside the direct regulatory supervision of regulators like the RBI and the Sebi.
Amid a sharp plunge in rupee value till a few weeks ago, concerns were being raised about large NDF (Non Deliverable Forward) forex market trades in rupee outside India.
According to BIS, the average daily foreign exchange market turnover in India stands at about USD 31 billion in 2013, which accounts for 0.5 per cent of the global turnover.
However, the daily turnover of rupee trades stands at about USD 53 billion (accounting for a one per cent global market share), which includes USD 50 billion worth trades in the rupee-US dollar transactions.
A huge volume of rupee trades outside India was already a problem area and the latest global regulatory probe into the possible forex market manipulations have now added to the concerns of the Indian regulators, a senior official said, while adding that they would extend all possible support to the global regulatory authorities.
Those looking into the matter mainly include Swiss Financial Market Supervisory Authority FINMA, UK's Financial Conduct Authority (FCA), as also other regulators in Europe and the US, while they are also approaching Indian regulators like Sebi and RBI for the worldwide probe.
Besides the financial sector regulators, competition