Fubon Bank Taipei Analyzes Three Key Factors Influencing H2 Interest and Exchange Rates

Taipei Fubon Bank (TFB) General Manager Kuo Pei-ting stated that the US midterm elections, divergent monetary policies among major central banks, and geopolitical impacts on inflation and capital flows will shape interest and exchange rate markets in the second half of 2026. Fubon Financial Chief Economist Kevin Lo advised companies to optimize cash allocation, lock in interest rates, and strengthen liquidity management if the economy achieves a soft landing.

During the 2026 Fubon Interest and Exchange Rate Forum, the bank highlighted that the global landscape is at a critical juncture. Factors such as US political developments and central bank policies are expected to drive volatility in financial markets.

Kevin Lo pointed out that global market variables remain centered on US interest rate paths, AI investment expansion, and geopolitical risks. With hawkish signals from the June FOMC meeting and persistent concerns over price inflation, market expectations for short-term rate cuts have cooled, leading to simultaneous declines in stock and bond markets. Regarding AI, Lo noted that the industry is experiencing a structural adjustment. While speculative AI concepts face correction risks, the adoption of AI Agents in business applications continues to support economic growth, contributing to Taiwan's Q1 2026 GDP performance.

Lo presented three scenarios for the second half of the year: if the economy achieves a soft landing, firms should focus on liquidity and rate risk management; in an accelerating growth scenario, companies should leverage equity financing and M&A opportunities; in a stagflation scenario, firms must implement emergency liquidity plans and reduce non-core capital expenditures.

TFB Senior Vice President Chang Pei-chung noted that the US Dollar is expected to fluctuate between 99 and 102 due to resilient economic data and AI-related capital inflows. Meanwhile, the Euro is projected in the 1.12–1.17 range, the Japanese Yen in the 155–170 range, and the Chinese Yuan in the 6.6–6.85 range, as policy measures focus on maintaining stability and mitigating capital outflows.