Tether hits 7–10% premium on Indian exchanges amid supply-demand gap
In brief
- USDT traded at 7–10% premium on Indian platforms, up from typical 3–4% gap
- CoinDCX and CoinSwitch attribute spike to demand outpacing local token supply
- Neither exchange addressed India's Enforcement Directorate action on USDT payments
- Market makers may have scaled back overseas sourcing after ED's recent move
Premium widens as demand outpaces supply
The widening premium reflects a fundamental mismatch: more buyers than sellers are willing to trade USDT near the global price. Minal Thakur, CFO of Mumbai-based CoinDCX, framed the premium as a signal of local arbitrage economics. The gap widens whenever local demand outpaces the supply of tokens actually available to trade.
"The premium then becomes a signal of the local arbitrage band: how expensive or slow it is for liquidity providers to replenish supply and close the gap," Thakur said in a statement.
Ashish Singhal, co-founder and CEO of CoinSwitch, stressed that exchanges do not manually set USDT prices. Prices are determined by buyers and sellers trading on the platform. On CoinSwitch, USDT has traded at around a 9% premium over the past few days.
Market mechanics, not manipulation
Stablecoins have traded at premiums in several markets during periods of elevated demand or liquidity constraints. This phenomenon is not unique to India. Both CoinDCX and CoinSwitch attribute the premium entirely to organic supply-and-demand dynamics.
Neither executive directly addressed India's Enforcement Directorate action on USDT payments or its effect on token supply in their public statements. That said, market makers and liquidity providers could have scaled back from sourcing USDT overseas after the ED's recent move, creating a supply-side shortage. Operating on Indian exchanges has been relatively tougher for market makers anyway, given a flat 30% tax on gains, no allowance to offset losses, and a restrictive 1% tax deducted at source.
The stablecoin's market cap stood at $184.68 billion as of this writing, making it the world's largest dollar-pegged stablecoin.
