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Feb 24 2007 11:45AM
Officials play down rumours of ban on derivatives trading
New Delhi, Feb 24 - Highly placed sources in domestic exchanges have made light of rumours circulating in trading circles and amounting to looming prospects of ban on forwards business of agri-commodities traded on these exchanges. Labelled to be a major cause to fuelling the inflation, the forwards trade is facing severe criticism from elected representatives. Exchange officials, wishing not to be named, said a ban on futures was unlikely."This government will not do that," said an official at one of the exchanges, which began trading in farm products as recently as 2003. "It is not going to happen."Recent comments from Agriculture Minister Sharad Pawar indicating to be under pressure from members of the coalition government to act and the government wanted to appoint an expert group to explore any link are seen to have dampened the spirit of the market. Though Pawar made it clear that he individually does that feel the futures play any major role or for that matter any role in the sharp rise of prices. Traders had been fearing a ban on trading in commodities like wheat, guar and other agri commodities. The market buzz was seen to sharply bring down trading volumes in wheat at NCDEX & MCX. Guar futures were also seen to register heavy losses in Friday trade. The wholesale price inflation has been hovering around two-year highs in recent weeks. Data released on Friday showed inflation for the 12 months to Feb. 10 at 6.63 percent, slightly lower than previous week's rate of 6.73 percent after a fall in food and textile prices.
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