Executives at major Indian exchanges CoinDCX and CoinSwitch say the recent jump in USDT premiums reflects a clear imbalance between demand and supply, exacerbated by thin domestic liquidity.

Tether (USDT), the world’s largest dollar-backed stablecoin, is trading notably above its peg on Indian platforms. While some reports linked the spike to recent enforcement developments, exchanges maintain that prices are being driven by underlying market forces.

Over the weekend, USDT traded at a premium of 7%–10%, briefly reaching around ₹102.88 versus an official dollar rate near ₹94.65. Typically, the premium sits closer to 3%–4%, representing the added cost of accessing dollar exposure through crypto instead of traditional banking channels.

The move followed action by the Enforcement Directorate tied to USDT-related activity, though exchanges point primarily to tightening supply conditions.

According to CoinDCX’s Minal Thukral, local pricing is shaped by order-book depth relative to global benchmarks. India’s position as a net crypto buyer means rupee demand often outpaces available sell-side liquidity. When liquidity around global price levels thins, prices move higher until the market clears.

In practical terms, more buyers are seeking USDT than sellers are willing to provide at international rates, pushing the premium upward.

CoinSwitch co-founder and CEO Ashish Singhal emphasized that the premium is market-driven and not set by exchanges. Instead, it reflects broader liquidity dynamics and the availability of dollar-backed assets. He added that similar premiums have appeared in other markets during periods of elevated demand or constrained supply.

On CoinSwitch, USDT has traded at roughly a 9% premium in recent days, in line with broader trends across Indian platforms.

Both exchanges attribute the elevated premium to organic market conditions—strong demand, limited supply, and reduced liquidity—rather than platform-imposed pricing.

While neither executive directly addressed the enforcement action’s impact, it may have contributed to the supply squeeze. Market makers could have scaled back overseas USDT inflows, tightening liquidity further.

India’s regulatory framework—including a 30% tax on gains, no loss offsets, and a 1% tax deducted at source—has also made it more difficult for market makers to operate efficiently, contributing to persistent pricing dislocations.