India Central Bank Cuts Key Rate, Boosts Liquidity To Support 'goldilocks' Economy

Forex

Central Bank

Summary:

The Reserve Bank of India (RBI) cut its key repo rate by 25 basis points on Friday and took steps to boost banking-sector liquidity by up to US$16 billion (RM65.8 billion) to support a "goldilocks economy".

The six-member monetary policy committee voted unanimously to lower the repo rate to 5.25%, in line with a consensus view, and maintained a "neutral" stance, suggesting room for further rate cuts.

The central bank has now cut rates by a total of 125 basis points since February 2025. It held rates in August and October.

The Indian economy is facing a "rare goldilocks" period, RBI Governor Sanjay Malhotra said in a video address.

Since October, India's economy has experienced rapid disinflation leading to a breach of the central bank's lower threshold of tolerance, said Malhotra, adding that growth has remained strong.

Given these macroeconomic conditions, "policy space" exists to support growth, he added.

The RBI also decided to conduct open market operations of one trillion rupees (US$11.14 billion or RM46 billion) to buy bonds this month, and another US$5 billion in forex swaps to add liquidity to the banking system and speed up transmission of lower rates.

India's benchmark 10-year bond yield dropped nearly five basis points to 6.4581% after the central bank's moves. The rupee fell 0.1% to 89.87, while the benchmark equity indexes were up 0.1% each.

Stronger growth; lower inflation

The central bank raised its GDP forecast for the current year to 7.3% from its previous estimate of 6.8% while the inflation projection was lowered to 2% versus 2.6% in October.

The South Asian economy expanded at a sharper-than-expected clip of 8.2% in the July-September quarter but growth is expected to slow as the full impact of up to 50% tariffs imposed by the US hit exports and sectors from textiles to chemicals.

External uncertainties could pose "downside risks" to growth, Malhotra said.

On the other hand, retail inflation stood at an all-time low of 0.25% in October and is expected to remain soft in coming months. The central bank targets inflation at 4%, within a tolerance band of 2% on either side.

"Underlying inflation pressures are even lower," Malhotra said, pointing to a "generalised" decline in price pressures.

Source: Theedgemarkets

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Gerik

Economic

RBI Cuts Rates as Growth Risks Overshadow Inflation Relief

The Reserve Bank of India (RBI) delivered a 25 basis-point rate cut, bringing the benchmark policy rate to 5.25%, marking its first reduction in nearly five years. The unanimous decision by the monetary policy committee (MPC) aligns with expectations and reflects a policy shift prioritizing economic support over inflation containment.

Although inflation has eased and is projected to trend lower in early 2025, Governor Sanjay Malhotra emphasized underlying weaknesses in key indicators, such as industrial output and export volumes. These signs of strain despite headline GDP expanding 8.2% year-on-year in Q3 suggest that India's strong top-line growth is not yet translating into sustained momentum across all sectors.

This policy move follows an earlier decision in October to keep rates unchanged. Back then, the central bank flagged the risk of growth deceleration in the second half of the fiscal year due to mounting global trade headwinds. The December rate cut thus reflects a causal response to both external pressures and lagging domestic demand, rather than a reactive move to inflation.

Industrial Output and Manufacturing Show Signs of Deceleration

Despite India’s strong Q3 performance, October's industrial activity dropped to a 14-month low, revealing signs of an economic slowdown. November’s HSBC Manufacturing PMI also slipped to a nine-month low, reinforcing concerns about weak business sentiment and production slowdowns.

The trend indicates a direct causal link between external pressures such as reduced export demand and weaker domestic industrial performance. The subdued bank lending environment further compounds the situation. As noted by Sanjay Mathur of ANZ, the absence of a strong credit uptake following earlier rate cuts indicates that monetary easing has yet to revive private-sector investment or consumption in a meaningful way.

Tariffs and Trade Uncertainty Cloud Export Outlook

India’s export sector has been hit particularly hard by new U.S. tariffs, which came into effect in August and imposed a 50% duty on Indian goods. Exports to the U.S. dropped for the second straight month in October, falling 8.5% year-on-year to $6.3 billion. Overall exports fell 11.8% to $34.38 billion in the same month.

This decline is not merely coincidental it is causally linked to the tariff regime, which has dampened India’s competitiveness in key markets. In response, New Delhi implemented a domestic fiscal stimulus by cutting Goods and Services Tax (GST) rates in September, aiming to boost internal consumption during the festive season.

While GST collections spiked in October to ₹1.95 trillion ($21.7 billion), reflecting stronger seasonal demand, the momentum weakened in November with a marginal year-on-year growth of just 0.7%, highlighting the limitations of short-term fiscal measures.

Currency Weakness Adds Another Layer of Economic Risk

The Indian rupee has come under renewed pressure, slipping past the psychologically important 90-per-dollar mark before recovering slightly. Currency depreciation, if sustained, could exacerbate inflation through higher import costs, potentially complicating the RBI’s ability to cut rates further.

However, the central bank’s willingness to act despite the rupee’s weakness underscores the urgency of stimulating demand amid fragile external conditions and domestic slowdown. This reflects a policy trade-off: choosing short-term growth support over currency stability, at least temporarily.

Rate Cut Aims to Cushion Growth as Trade and Industrial Strains Mount

India’s 25 basis-point rate cut reflects the RBI’s shift toward proactive support for an economy facing clear external and domestic headwinds. The move acknowledges strong headline GDP growth, but also recognizes a more nuanced landscape in which exports are faltering, manufacturing is losing steam, and lending remains subdued.

With trade negotiations with the U.S. unresolved and domestic stimuli offering only partial relief, the Indian economy appears to be at a pivot point. Whether this rate cut sparks a revival in credit and industrial activity will depend on broader confidence signals and the stabilization of global trade dynamics into 2026. For now, the central bank is laying the groundwork for a soft landing amid increasingly uneven terrain.

Source: CNBC

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Samantha Luan

Forex

Economic

Russia is lining up a naval base on the Red Sea. US President Donald Trump seeks peace in the Democratic Republic of the Congo while threatening war in Nigeria. Extremists are on the march from the Sahel to southern Africa. Across the continent, foreign powers are scrambling for vital resources and real estate.

Africa may not get as many headlines as other regions. But it's where many of the most important trends of the modern era come together — and it's a preview of just how ferociously messy a multipolar future might be.

For years, Africa was a strategic backwater. In 2000, the Economist famously called a region mired in debt and underdevelopment the "hopeless continent." But now, Africa looms larger on the geopolitical scene.

The global map of economic opportunity has shifted, as better infrastructure — physical and digital — has helped connect a fragmented continent, while Indian Ocean ports provide links to lucrative markets in Asia and the Middle East. In recent years, several of the world's fastest-growing economies have been found in Africa. The continent's middle class could exceed 1.1 billion people by 2060.

Africa is central to the world's energy future, thanks to prodigious oil and gas reserves as well as generous deposits of materials — cobalt, manganese, copper — that are critical to renewables. It is a demographic powerhouse in a graying global system: The continent may account for half of all births by century's end.

Africa certainly isn't hopeless, these days. But it is still marked by some uglier trends.

As the global incidence of war rises, Africa is awash in conflict — whether the vicious civil wars that have recently consumed Sudan and Ethiopia, or multisided, cross-border struggles like those that have ravaged Congo for decades. The continent has arguably displaced the Middle East as the epicenter of violent extremism: Terrorist groups torment governments and societies from Mali to Mozambique.

Bloody instability has led to democratic backsliding: The recent coup in Guinea-Bissau makes 10 military takeovers since 2020. Most of all, this mix of opportunity and volatility has made Africa a showcase for the many layers of rivalry that convulse the global system today.

The great revisionist states, Russia and China, see Africa as a place to enhance their influence while weakening America's. Russia does so by using arms and mercenaries to intervene in conflicts and coups from Niger to the Central African Republic. China uses trade, debt and infrastructure projects to entrench its economic and diplomatic influence. Africa's wars provide a "test lab," remarked one former Chinese officer, where Beijing can deploy peacekeepers and hone a superpower's strengths.

Yet middle powers and micro-powers are also reaching for glory.

Middle Eastern players — Qatar, the United Arab Emirates, Saudi Arabia, Iran, Turkey — have exported their rivalries into North Africa and the Horn, which they view as African extensions of their own regional neighborhood. India considers East Africa the western edge of its geopolitical domain and a vital flank that must be held against China. Former colonial powers and advanced democracies seek African routes to resilience for critical mineral-supply chains.

If you want a sense of how complex and contested the African geopolitical environment is, look at Djibouti. That small country is positively littered with foreign military bases, because it sits at the strategic nexus of the Gulf of Aden and the Red Sea.

African states aren't mere bystanders: The continent's internal geopolitics have become fiercely competitive. Regional potentates — Ethiopia, Kenya, South Africa, Nigeria — all seek primacy in their corners of the continent. Rwanda, once a failed state wracked by genocide, now projects power across Central Africa and the Great Lakes region.

Unfortunately, this mishmash of competing interests usually exacerbates Africa's miseries. Rivalry between South Africa and Rwanda has long fueled war in Congo. A dizzying array of outside actors have pumped arms and money into Sudan's brutal civil war.

Meanwhile, the US has often been lagging. For decades, it viewed Africa mostly through the lens of counterterrorism. It combined groundbreaking anti-AIDS initiatives that saved millions with disappointing development projects and military interventions — like the one that toppled Libya's Moammar Al Qaddafi in 2011 — that sometimes went catastrophically awry.

Trade and infrastructure initiatives typically failed to keep pace with Chinese influence. The Lobito Corridor, which promises to link the Angolan coast to Congo's huge mining deposits, is promising. But when Vice President Kamala Harris visited Zambia in 2023, to show America's commitment to the continent, she landed at a Chinese-financed airport and traveled on Chinese-built bridges and roads.

Donald Trump's Africa policy will, characteristically, help in some ways and hurt in others. Trump has rightly focused on securing critical minerals amid intensifying economic rivalry with China. He has sought, with mixed success, to end wars in Congo and other conflict zones.

Yet Trump's crackdown on foreign aid may cost African lives and American soft power. His tariffs have hammered developing economies that desperately need foreign markets. His threats to intervene militarily in Nigeria, to save its traumatized Christian population, blindsided the government there.

The better approach would be to tone down the theatrics, roll back the tariffs and stop letting the bad parts of Trump's policy impede the good ones. It would also involve recognizing that a world in which Africa remains a bottom-tier priority for US statecraft is one in which American influence there will continue to decline.

Whatever he does, Trump won't find Africa an easy place to navigate. But he won't have the luxury of treating it as an afterthought. There, dynamism competes with disaster; multiplayer struggles intensify local conflicts. Africa's global salience is growing, not least because of the viciously competitive era that is coming into view.

Brands is also a senior fellow at the American Enterprise Institute, the co-author of Danger Zone: The Coming Conflict with China, and a senior adviser to Macro Advisory Partners.

Source: Bloomberg Europe

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Economic

Commodity

Australia Breaks Export Records Amid Strong U.S. Demand

According to Meat & Livestock Australia (MLA), the country has already shipped 1.4 million tons of beef in the first eleven months of 2025 surpassing the full-year record of 1.34 million tons set in 2024. The performance represents a 15% year-on-year increase, driven primarily by demand from the United States, which now accounts for nearly a third of all Australian beef exports.

Despite a 10% tariff briefly imposed by the Trump administration earlier in the year, U.S. importers continued to buy at record levels, reflecting a causal relationship between domestic shortages and Australia’s export strength. American herd numbers have fallen to a 70-year low, severely constraining domestic supply and pushing retail red meat prices upward. This tight supply scenario has increased U.S. reliance on imports especially from Australia, which supplies high-quality, grain-fed and grass-fed beef.

Even after the tariff was lifted, demand for Australian beef remained robust, a sign that structural supply issues in the U.S. outweigh short-term policy disruptions.

China, Japan, and Korea Amplify Global Demand Momentum

Australia’s export success was not limited to the United States. Shipments to China rose by 43% year-over-year to 243,000 tons, while demand from Japan and South Korea also showed positive growth. This uptick reflects a broader global trend: strong consumer demand for red meat amid economic reopening, declining COVID-related restrictions, and rising middle-class consumption across Asia.

The export surge occurred despite herd reductions in Australia's southeastern states due to prolonged drought. That Australian production still managed to hit record levels in 2025 highlights improved processing efficiency, feedlot management, and overall supply chain resilience. This demonstrates a causal outcome where productivity gains have compensated for input constraints.

Tariff Policy, Supply Chains, and Political Signals

Earlier in 2025, former President Donald Trump re-imposed a 10% tariff on Australian beef, framing it as part of a broader effort to protect U.S. agriculture while controlling domestic food prices. However, the tariff was subsequently withdrawn as inflationary pressures mounted and U.S. meat shelves continued to suffer from shortages. The rapid reversal reveals a policy trade-off: while tariffs may signal protectionism, their unintended consequence higher consumer prices can generate political backlash, especially in an election cycle.

As a result, even in the face of policy volatility, market fundamentals continued to dominate trade behavior. The resilience of Australian exports under these conditions underlines that trade flows in essential goods like protein are less sensitive to short-term policy barriers when structural supply-demand gaps persist.

Strong Fundamentals into 2026

MLA’s General Manager for International Markets, Andrew Cox, emphasized that global beef demand is surging and that Australia is well positioned to maintain its export leadership into 2026. The convergence of high global consumption, limited supply in key markets like the U.S., and Australia's capacity to meet that demand suggests a sustained bullish trajectory for the sector.

While risks remain such as future climate shocks, exchange rate volatility, and geopolitical frictions Australia’s current export success is supported by both cyclical demand and structural supply shortages in competitor markets. If these trends continue, Australia may further consolidate its role as a dominant force in global red meat trade.

Australia’s record-setting beef export performance in 2025 highlights the strength of its livestock sector and its ability to adapt to both environmental challenges and policy headwinds. Even temporary tariff disruptions failed to offset the pull of global demand, particularly from the United States, where supply constraints remain acute. With production efficiencies improving and export markets expanding, Australia is poised to remain a global beef powerhouse well into 2026.

Source: Bloomberg

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Economic

Commodity

Profit-Taking Triggers Pullback in Overbought Silver Market

Silver prices extended their retreat from a historic peak earlier this week, falling below $57 per ounce after a swift surge that had pushed the metal into technically overbought territory. The white metal declined over 2% in the previous session, breaking an eight-day winning streak, and dipped further by 0.4% to $56.8850 as of Friday morning in Asia.

Technical indicators confirmed the need for a correction. The 14-day Relative Strength Index (RSI) dropped below the critical level of 70, signaling a cooling of excessive momentum. This decline reflects a textbook causality pattern: when price momentum outruns fundamentals, profit-taking ensues, leading to short-term price moderation.

Rally Fueled by Supply Constraints and Monetary Policy Outlook

Silver’s recent rally having roughly doubled in value since the start of the year was catalyzed by multiple overlapping forces. A historic supply squeeze in London created a sharp price spike in recent months, though that bottleneck has partially eased as more bullion flowed into the trading hub. Yet global supply constraints remain in play, particularly in Asia. Inventories in China, one of the largest consumers of silver, are near decade-lows, maintaining pressure on physical availability.

The price uptrend has also been closely tied to growing expectations that the U.S. Federal Reserve will cut interest rates at its upcoming meeting. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like silver and gold, thus boosting investor demand. Swap markets currently imply near-certainty of a rate reduction next week, a sentiment that held firm even after U.S. jobless claims fell to a three-year low an economic signal that might otherwise dampen dovish monetary speculation.

The connection between rate cut expectations and precious metal demand is causal rather than coincidental. As borrowing costs decline, real yields fall, enhancing the relative attractiveness of commodities like silver.

Broader Precious Metals Market Softens in Tandem

Silver’s decline came alongside a modest pullback across other precious metals. Gold dropped 0.3% to $4,197.11 per ounce, while platinum and palladium also retreated. The Bloomberg Dollar Spot Index held steady after a slight gain in the previous session, indicating that dollar strength was not a major pressure point on metals during this phase of correction.

This synchronized dip across the metals complex reflects a broader shift toward market consolidation following a period of rapid appreciation, rather than any reversal in fundamentals. Investors are simply recalibrating positions ahead of the critical Fed decision, rather than abandoning the metals space altogether.

A Temporary Cooldown in a Structurally Bullish Market

Silver’s retreat from its all-time high appears to be a natural pause following an intense rally driven by both supply-side stress and dovish macroeconomic expectations. With structural shortages still present in key markets and the likelihood of a Federal Reserve rate cut on the horizon, the medium-term outlook for silver remains constructive.

This correction offers the market a chance to reset without undermining the broader bullish narrative. Unless fundamental conditions change significantly such as a reversal in Fed policy direction or a sudden surge in global silver supply the white metal may soon resume its upward trajectory once technical indicators stabilize.

Source: Bloomberg

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Economic

Commodity

Crude Oil Gains Tempered by Uncertainty and Surplus Dynamics

After a two-day rally, global oil benchmarks Brent and West Texas Intermediate (WTI) are treading water, reflecting the market’s indecision amid geopolitical developments and structural oversupply. Brent crude remained above $63 a barrel, following a 0.9% increase in the prior session, while WTI hovered near $60.

These modest gains are partly tied to diplomatic optimism as Ukrainian representatives prepare for renewed peace talks in Florida. Despite this, Russian President Vladimir Putin has publicly rejected aspects of the US-backed ceasefire plan, casting doubt on the viability of a near-term resolution.

The oil market's response to these developments reveals a primarily correlational relationship: hopes for de-escalation may lift sentiment temporarily, but no causative shift in supply dynamics has occurred. Traders are positioning based on scenarios rather than outcomes.

Prospect of Sanctions Relief Weighs Heavily on Forward-Looking Expectations

Should a peace agreement progress meaningfully, it could lead to the lifting of sanctions on Russia, a major global supplier, thereby unlocking additional crude exports. However, with no binding resolution in place, this remains a speculative risk factor rather than a concrete price driver.

Even without new Russian volumes entering the market, the outlook is already bearish due to current surplus levels. Crude inventories are rising globally, and leading producers are adjusting their pricing strategies accordingly.

Saudi Aramco, the world’s largest oil exporter, has announced a reduction in its flagship Arab Light crude price for January delivery, marking the lowest level since 2021. Simultaneously, Canadian crude benchmarks have fallen sharply, reinforcing the broad-based nature of this pricing pressure.

These shifts are not incidental but reflect a clear causal chain: excess supply leads to competitive price cutting among exporters, which in turn caps any upward momentum in futures markets.

Analyst Sentiment Reinforces the Bearish Narrative

Zhou Mi, a commodities strategist at Chaos Ternary Futures, argues that the current market environment is fundamentally oversupplied. He views the Ukraine talks and US rhetoric on Venezuelan sanctions as “market noise,” suggesting that geopolitical headlines are failing to alter the underlying supply-demand balance.

Zhou's assessment points to a continuation of the bearish trend, unless major supply disruptions occur—an unlikely scenario given current conditions. His commentary suggests that while short-term volatility may be driven by headlines, the dominant force in the market remains structural oversupply.

Russia-India Energy Diplomacy Adds Another Layer of Complexity

Amid the backdrop of peace negotiations, Russian President Putin has also arrived in India for his first state visit since the full-scale invasion of Ukraine began. This bilateral engagement is likely to include discussions on energy cooperation, potentially deepening Russia's oil ties with India, one of the largest non-Western buyers of Russian crude.

Though speculative at this stage, any expansion in Russia-India energy agreements could further shift global supply flows, particularly if India secures preferential terms in response to Western isolation of Russian exports. This geopolitical realignment could sustain Russia’s export volumes even in the face of sanctions, indirectly pressuring other oil-exporting nations to remain competitive on price.

Volatile Near-Term, Bearish Long-Term

While oil prices are temporarily supported by geopolitical speculation and ceasefire hopes, the broader market remains mired in oversupply. Saudi pricing adjustments and falling Canadian crude benchmarks reflect a real-time response to weak demand signals and saturated inventories.

Unless a binding geopolitical resolution materializes or OPEC+ enacts deeper cuts, the structural imbalance will likely maintain downward pressure on prices. For now, the crude market remains range-bound, swayed by diplomatic optimism but tethered by a fundamental supply excess.

Source: Bloomberg

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Cryptocurrency

Forex

Binance announced it will cease support for deposits and withdrawals on selected networks as of December 12, 2025, according to its latest operational update.

The decision affects user operations and liquidity, as certain tokens may have no alternative network support, potentially impacting market activity for those assets.

Binance Ceases Transfers on Specific Networks

Binance announced cessation of token transfers on specific networks. This operational update follows similar changes like the Neo Legacy network shutdown, often due to infrastructure and risk management. The official announcement is made through Binance's support portal. The network shutdowns are part of Binance's routine risk and infrastructure management initiatives. Founder Changpeng Zhao and the Binance team regularly conduct such changes, not marking them as strategic hostilities towards any specific blockchain hosting or network provider.

"Binance has treated network and token support changes as routine risk and infrastructure management decisions for the exchange rather than strategic hostility toward any specific chain." — Changpeng Zhao (CZ), Founder and Former CEO [2]

User Migration Expected Amid Network Changes

The changes underscore Binance's ongoing network management efforts. Discontinuing support may result in direct operational impacts, especially for users needing to migrate. Historically, short-term disruptions precede long-term asset balance as alternative network routes become available. Market reactions to Binance's actions are primarily operational. The decision may trigger users to seek alternative networks, though trading generally continues. Historically, such changes have led to only limited shifts in network liquidity and asset support.

Expert Insights on Risks and Solutions

Similar scenarios like the Neo Legacy withdrawal cessation suggest temporary disruptions. Binance frequently manages such asset re-routing without significant market impact, retaining trading capacities. Such cases reinforce the company's approach to risk and infrastructure management. Experts noted that while these transfer halts represent operational risks, the long-term availability of alternative network routes minimizes financial impacts. Binance's transparency and communications highlight a well-structured approach to complex network infrastructures. R