This update was written automatically with AI from market data and news wire reports, and published without review by a person.
Key Takeaways
- Israel’s shekel (USD/ILS) weakened 1% to 3.084 as exit polls from the October 27 election indicated a political deadlock between Prime Minister Benjamin Netanyahu and challenger Gadi Eisenkot.
- Taiwan’s Central Bank revealed that 80% of its $600.75 billion foreign exchange reserves are held in U.S. bonds, emphasizing the island's reliance on dollar-denominated assets.
- Governor Yang Chin-long clarified that Taiwan’s 2% inflation level is a benchmark rather than a hard ceiling, signaling flexibility as consumer prices remain elevated.
- Japanese 10-year government bond (JGB) yields rose 4 basis points to 2.825%, driven by a rebound in technology shares and anticipation of upcoming central bank meetings.
- Foreign institutional investors have withdrawn approximately $54.3 billion from Taiwan’s financial markets since July, putting significant downward pressure on the New Taiwan Dollar.
Israeli Election Stalemate Rattles Currency Markets
The Israeli shekel faced immediate selling pressure on Wednesday after exit polls suggested no clear path to a majority for either major bloc in the 120-seat Knesset. The USD/ILS pair gained 1% to reach 3.084 as investors braced for weeks of political horse-trading or the potential for a caretaker government under Benjamin Netanyahu.
Market analysts noted that the deadlock comes at a sensitive time, with regional tensions involving Iran already keeping risk premiums high. A prolonged period of political uncertainty could further impact domestic stocks and global oil prices, which settled near $113.88 per barrel as the vote concluded.
Taiwan Central Bank Signals Policy Flexibility
Taiwan Central Bank Governor Yang Chin-long addressed the Legislative Yuan on Wednesday, clarifying the bank's stance on rising prices. He stated that the bank has never ruled out inflation remaining above 2%, describing the figure as a "benchmark" rather than a rigid limit.
This pragmatic approach comes as Taiwan's headline inflation was forecast at 2.03% for 2026, fueled by an AI-driven economic boom that has seen GDP growth projections raised to 11.48%. The bank opted to keep its benchmark interest rate at 2.000% to support traditional industries that have not benefited equally from the technology surge.
Reserve Management and Capital Outflows
In a detailed report on reserve management, the Central Bank of the Republic of China (Taiwan) confirmed that 80% of its foreign exchange reserves—which totaled $600.75 billion at the end of September—are invested in U.S. government bonds. The bank cited the liquidity and safety of U.S. debt as primary reasons for this heavy concentration.
The report also highlighted a massive wave of capital flight, with foreign institutional investors pulling $54.3 billion out of Taiwan since July. These outflows, largely driven by geopolitical concerns and a global sell-off in AI-related stocks, have forced the central bank to intervene by selling $17.04 billion in the first half of the year to stabilize the local currency.
Japanese Yields Climb Amid Tech Rebound
In Tokyo, the 10-year Japanese Government Bond (JGB) yield rose to 2.825%, a 4-basis-point increase. The move was attributed to a recovery in semiconductor and AI-related equities, which reduced the demand for safe-haven assets like sovereign debt.
Investors are now looking toward the Bank of Japan's upcoming policy meeting. While a pause is expected this week following September's rate hike to 1.25%, many market participants are pricing in a further increase to 1.5% by December to combat persistent cost-push inflation.
Automated market updates written with AI from market data and news wire reports, published without human review.