USDT Soars Above Peg in India, Exchanges Say Market Forces at Play

Executives at Indian crypto exchanges CoinDCX and CoinSwitch say the sharp premium on USDT is being driven by a classic demand–supply imbalance, worsened by shallow local liquidity.

Tether (USDT) is trading well above its dollar peg on Indian platforms. While some observers linked the spike to recent enforcement activity, exchange leaders argue that basic market mechanics are the primary cause.

Over the weekend, USDT traded at a 7%–10% premium, briefly touching about ₹102.88 compared with an official USD-INR rate near ₹94.65. Under normal conditions, the premium tends to hover around 3%–4%, reflecting the extra cost of accessing dollar exposure through crypto rails.

The surge followed action by the Enforcement Directorate involving USDT-linked flows, though exchanges say tightening supply is the bigger factor.

CoinDCX’s Minal Thukral said local prices are determined by order-book depth versus global benchmarks. With India structurally a net buyer of crypto, demand for USDT often exceeds available supply. When liquidity at global price levels thins out, prices rise until buyers and sellers meet.

In simple terms, buyers are outnumbering sellers at global rates, pushing USDT above its peg locally.

CoinSwitch CEO Ashish Singhal said the premium is not set by exchanges but reflects broader liquidity constraints and access to dollar-backed assets. He noted that similar premiums have emerged in other markets during periods of strong demand or restricted supply.

On CoinSwitch, USDT has recently traded near a 9% premium, mirroring trends across Indian exchanges.

Both platforms stress that the elevated pricing stems from organic market conditions—robust demand, constrained supply, and thin liquidity—not exchange intervention.

Although the executives did not directly attribute the move to enforcement actions, such developments may have reduced USDT inflows from overseas market makers, tightening supply further.

India’s regulatory setup—including a 30% tax on gains, no loss offsets, and a 1% TDS—has also made it harder for market makers to operate efficiently, contributing to recurring price dislocations in the market.