USDT, the world’s largest dollar-pegged stablecoin, is trading well above its face value on Indian crypto platforms. While local reports attribute the premium to a recent enforcement action, exchanges explain it as simple supply-demand dynamics.
The stablecoin’s premium rose 7-10% above its dollar value on Indian platforms over the weekend. At one point, USDT was trading around ₹102.88 against the official dollar-rupee rate of around 94.65 per USD. The market capitalization of USDT stood at $184.68 billion at the time of writing, making it the largest dollar-pegged stablecoin in the world.
This spread, known as the USDT premium, is normally between 3% and 4%. Simply put, these are the additional rupees that buyers pay for dollar exposure through USDT rather than through a bank. The premium widens whenever local demand exceeds the supply of tokens actually available for exchange.
The rise follows action by India’s Enforcement Directorate regarding USDT payments, the country’s financial crime agency said, CoinDesk reported on Monday.
Now, stock exchanges are responding to rising premiums and their explanations closely match this supply-side account.
The market clears up
Minal Thukral, executive vice president of Mumbai-based CoinDCX, characterized the premium as a function of the depth of the local order book relative to the global dollar benchmark price.
“The INR price of USDT is set by the depth of the local order book and the global dollar benchmark. India has structurally been a net buyer of crypto, so local demand for INR often exceeds the liquidity available on the sell side. When this liquidity is thinner near the global benchmark price, the market clears to the upside,” Thukral told CoinDesk.
