Thursday May 8, 08:51 AM
India suspends trade in select commodities for 4 months to stem inflation UPDATE
(Updates with additional quote, background and details)
MUMBAI (Thomson Financial) - The Indian commodities market regulator said it has suspended trade in selected commodities for four months, in a move to tame spiraling inflation.
The Forwards Markets Commission (FMC) said it has suspended trading in potato, soy oil, rubber and chana effective today.
'All existing contracts will be closed at the yesterday's closing prices,' Anupam Mishra, director at Forward Markets Commission told Thomson Financial News.
The suspension comes despite the Abhijit Sen committee, which was appointed by the government of India, saying it did not find any evidence of prices in the futures market affecting spot prices of commodities.
Inflation in the country rose to a fresh three-and-a-half year high of 7.57 percent for the week to end April 19, rising on higher food and oil prices, making it the fourth successive week that the Wholesale Price Index has stayed above the 7 percent mark, significantly above the central bank's revised target of 5.5 percent for the year.
However analysts said this move was on the expected lines and would have minimal impact on spiraling inflation.
'There has been a muted response to this decision of the government as it was largely expected,' said Kishore Narne, vice-president research, AnandRathi Commodities, a brokerage in Mumbai.
The NCDEX's FUTEXAGRI index which consists of major agricultural commodities was 0.83 percent higher at 1,731.41.
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