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Thursday, May 8, 2008

Govt suspends future trading in 4 commodities for 4 months


In a further move to fight inflation the government has suspended
forward trading in four commodities - channa, refined soyoil, potato
and rubber with immediate effect for four months.

"The Forward Markets Commission (FMC) has issued the order
tonight(Wednesday) delisting channa (gram), refined soyoil, potato and
rubber contracts with immediate effect," Consumer Affairs Secretary
Yashwant Bhave said.

FMC is the regulator for commodity markets.

These contracts have been suspended for four months and investors and
traders, who have taken positions in these commodities, have to square
off their positions, Bhave added.


Futures trading in rice, wheat, tur and urad is already banned.


In the wake of high inflation, which is hovering over 7 per cent, the
government is faced with all-round criticism for high food prices.


In its bid to contain food rates, the government had earlier taken a
slew steps such as cutting import duties on edible oils and banning
export of non-basmati rice.


Finance Minister P Chidambaram had also said on Monday that "the
pressure is to suspend a few more food articles. If rightly or
wrongly, people perceive that commodity futures trading is
contributing to a speculation driven rise in prices, then in a
democracy you will have to heed that voice."


There has been a demand to ban futures trading in agriculture
commodites, especially in the view of high food prices.


The government had also set up an expert panel under the chairmanship
of Planning Commission Member Abhijit Sen to study the impact of
futures trading on prices of agricultural commodities.


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