【Fubon Financial Investor Conference 2】Estimates Fed to Cut Rates by 50 bps! NT Dollar Appreciation by 0.1 NTD Impacts Forex Reserve by 1.8 Billion TWD

　　Global central banks' annual meeting adopted a dovish stance, and the New Taiwan Dollar against the US Dollar today (25th) rose by up to 1.75 cents to 30.41 TWD during trading, marking the largest gain since August. Fubon Financial (2881) held an investor conference this afternoon. Chief Economist Luo Wei estimated that the Fed has room for a 50-basis-point rate cut this year. Regarding institutional investors' concerns about the impact of NT Dollar appreciation on Fubon Life, Senior Associate Bao Hualing stated that for every 0.1 NTD appreciation, the rough estimate of the impact on the company's foreign exchange reserve is 1.8 billion TWD.

　　The life insurance industry holds tens of trillions overseas, primarily in corporate bonds. At this afternoon's investor conference, foreign institutional investors focused on foreign exchange hedging conditions: if the NT Dollar appreciates further, what would be the impact on the company's "large reservoir level" of foreign exchange price reserve? (The price reserve can serve as a buffer when profits are impacted.) Bao Hualing mentioned that Fubon Life increased its foreign exchange price reserve by 56.1 billion TWD in the first half of the year. As the NT Dollar tends to depreciate, it continues to accumulate, benefiting flexibility in foreign exchange operations.

　　Regarding the impact, she stated that foreign currency policies currently account for about 31% of Fubon Life's portfolio. The hedging cost by year-end is expected to remain at 100–150 basis points (one basis point equals 0.01 percentage point). The NDF (Non-Deliverable Forward) foreign exchange hedging tool will be used for short-term operations, with prices reflecting supply and demand. Since this derivative is closely linked to market sentiment, the strategy will be more flexible. For every 0.1 NTD appreciation or depreciation against the US Dollar, the impact on the company's foreign exchange reserve is 1.8 billion TWD.

　　Additionally, she noted that Fubon Life's foreign exchange price reserve balance has increased from 51.6 billion TWD in the first half to 54.2 billion TWD in July and further to 65 billion TWD in August. Dynamic adjustments will be made to balance risk and hedging cost management.

　　As for the Fed's dovish stance, which is unfavorable for the US Dollar and puts appreciation pressure on the NT Dollar, what are the Fed's next moves? Fubon Financial Chief Economist Luo Wei estimated that there is room for a 50-basis-point cut this year. Subsequent actions will depend on US labor and inflation data, and even an additional 50–75 bps cut should not cause concern. Regarding the Taiwan Central Bank's direction, he believes that this year's inflation rate has dropped from 2.2% to 1.76%, and is estimated to be 1.64% next year, indicating relatively moderating inflation. If Taiwan's economy deteriorates, under tariff pressure, the central bank has the room and possibility to adjust monetary policy to keep interest rates at a relatively stable level.