Opening

Ahead of next week's summit between Trump and Xi Jinping in Washington, word has it that Beijing wants to keep a $14 billion arms sale to Taiwan frozen. In a moment, I'll tell you how this deal could end up as a bargaining chip. I'm Muyan, and today I'll also cover the Fed and the Bank of Japan both raising rates back to back, oil prices continuing to climb after an attack on a Saudi pipeline, and the New Taiwan dollar strengthening against the trend. Let's dive into today's top international stories.

Today's Global Headlines

1. Ahead of the Trump-Xi summit, Taiwan arms sale reportedly becomes a bargaining chip

• What happened: Xi Jinping is expected to arrive in Washington next Wednesday and depart on Friday for a summit with Trump. According to Euronews, U.S. official Edgard Kagan revealed that China is expected to announce around $30billionintariff-freeorlow-tariffimports,fulfillingpurchasecommitmentsmadeinMay\mathrm{.}Thereportalsonotedthata30\; billion\; in\; tariff-free\; or\; low-tariff\; imports,\; fulfilling\; purchase\; commitments\; made\; in\; May.\; The\; report\; also\; noted\; that\; a$14 billion arms sale to Taiwan, already approved by the U.S. Congress in January but not yet formally notified, is something Beijing wants to keep frozen.
• Why it matters: The summit is seen as a critical moment for easing U.S.-China trade tensions, but whether the Taiwan arms sale gets unfrozen could become a bargaining chip for both sides. Nothing has been finalized yet, and accounts vary.
• Taiwan's perspective: The fate of this arms deal affects the timeline of Taiwan's defense preparedness and also shapes the broader trajectory of U.S.-China-Taiwan relations.
• Source: Euronews (https://www.euronews.com/business/2026/09/18/what-to-expect-from-the-trump-xi-summit-from-tariffs-to-a-possible-30-billion-deal)

2. Taiwan confirms plans for a second quasi-official office in the Philippines, China calls it "doomed to fail"

• What happened: Foreign Minister Lin Chia-lung confirmed that Taiwan is setting up a second quasi-official representative office in the Philippines. China has strongly condemned the plan, calling it "doomed to fail." The report notes this is one of Taiwan's moves to break through diplomatically as Beijing continues to squeeze the space for Taiwan's overseas offices.
• Why it matters: This reflects Taiwan's continued search for new footholds beyond its existing diplomatic network, and it also affects how Beijing responds to Taiwan's foreign relations.
• Taiwan's perspective: The new office would handle personnel exchanges, services for overseas Taiwanese and migrant workers between Taiwan and the Philippines, and touches on Taiwan's diplomatic space within the first island chain.
• Source: Nikkei Asia (https://asia.nikkei.com/politics/international-relations/taiwan-tensions/taiwan-confirms-new-philippines-office-in-works-china-says-move-doomed)

3. AI and semiconductor boom drives New Taiwan dollar and Korean won to lead Asian currencies

• What happened: According to Nikkei Asia, the boom in artificial intelligence and semiconductors is pushing up both the New Taiwan dollar and the Korean won, making them among the strongest-performing currencies in Asia. The report contrasts this industry-driven appreciation in Taiwan and Korea with other economies that are relying solely on rate hikes to fight inflation.
• Why it matters: This shows that the impact of the AI and semiconductor boom on exchange rates has surpassed traditional interest rate policy tools, making Taiwan and Korea outliers in the Asian currency market.
• Taiwan's perspective: A stronger New Taiwan dollar squeezes exporters' currency conversion gains, affects insurers' overseas holdings, and raises the cost of currency exchange and overseas travel for ordinary people.
• Source: Nikkei Asia (https://asia.nikkei.com/business/markets/currencies/taiwan-dollar-south-korea-won-strong-among-asia-currencies-as-ai-booms)

4. Fed raises rates for the first time in three years, unanimous decision defies Trump's pressure

• What happened: At its September 15-16 meeting, the Federal Reserve unanimously voted to raise rates by a quarter point, lifting the federal funds rate target range to 3.75%-4%, the first hike since 2023, driven mainly by inflation concerns from surging oil prices. New Fed Chair Kevin Warsh had previously emphasized in a Jackson Hole speech that the underlying inflation trend hadn't meaningfully improved. The latest dot plot shows 16 of 18 officials expect at least one more rate hike this year.
• Why it matters: This rate hike is seen as a sign of the Fed asserting its independence despite Trump's continued pressure for rate cuts, highlighting the tension between central bank decision-making and political pressure.
• Taiwan's perspective: The U.S. rate hike, in tandem with tightening in Japan, will affect the New Taiwan dollar exchange rate, foreign capital flows in Taiwan's stock market, and expectations for domestic mortgage rates.
• Source: Euronews (https://www.euronews.com/business/2026/09/16/fed-raises-rates-for-the-first-time-since-2023-in-unanimous-vote-defying-trump)

5. Bank of Japan raises rates to 31-year high as inflation and wages both climb

• What happened: The Bank of Japan raised rates by a quarter point on September 18, lifting the policy rate from 1.0% to 1.25%, a 31-year high and the first hike since June. The report notes that core inflation in August remained close to the 2% target, but rising energy prices and global supply chain pressures pushed up overall prices, while a shrinking labor force continues to drive up wages.
• Why it matters: With the Fed's rate hike and the European Central Bank's rate at 2.5%, the Bank of Japan faces pressure to avoid excessive yen depreciation.
• Taiwan's perspective: The relative strength between the yen and the New Taiwan dollar affects the cost of traveling to Japan, and the competitive dynamics between Taiwan and Japan in automobiles, components, and tourism will be amplified by exchange rates.
• Source: Al Jazeera (https://www.aljazeera.com/news/2026/9/18/japans-interest-rate-hiked-to-31-year-high-at-1-25-as-inflation-rises)

6. Drone attack on Saudi pipeline pushes oil prices up over 5% in a week

• What happened: On September 18, U.S. West Texas Intermediate crude futures closed down 1.6% at $100.30perbarrel,whileBrentcrudefell0.9100.30\; per\; barrel,\; while\; Brent\; crude\; fell\; 0.9\%\; to\; close\; at$103.87, though both are up more than 5% since last Thursday. The trigger was a drone launched from Iraq that struck a Saudi Arabian oil pipeline, forcing a temporary shutdown and pushing Saudi Arabia to reroute exports through the Strait of Hormuz. Satellite imagery shows Saudi Arabia's exports through Hormuz over the past six days reached 2.8 million barrels per day, far above August's 700,000 barrels per day.
• Why it matters: This attack highlights the vulnerability of Middle East oil transport routes and will affect the future trajectory of global oil prices.
• Taiwan's perspective: Taiwan relies almost entirely on imported energy, so triple-digit oil prices directly weigh on domestic fuel and electricity prices, shipping costs, and manufacturing expenses.
• Source: CNBC (https://www.cnbc.com/2026/09/18/oil-prices-today-brent-wti-saudi-arabia-houthi.html)

7. Car bomb attack on mosque in Pakistan kills at least 27

• What happened: A mosque inside a police headquarters compound in Kohat, Khyber Pakhtunkhwa province in northwestern Pakistan, was struck by a car packed with explosives during Friday prayers. Gunmen then stormed the site and exchanged fire with police, killing at least 27 people, including 6 civilians and 15 police officers, with dozens more injured. Ittehadul Mujahideen, a group linked to Taliban commander Hafiz Gul Bahadur, claimed responsibility for the attack. Pakistani Prime Minister Shehbaz Sharif has ordered an expedited rescue effort.
• Why it matters: This attack shows that security in northwestern Pakistan remains tense, and militant groups' capacity to strike police institutions should not be underestimated.
• Taiwan's perspective: Deteriorating security in South Asia affects Taiwanese businesses' supply chain arrangements along the Pakistan-Afghanistan border and raises risk considerations for expatriate staff.
• Source: Al Jazeera (https://www.aljazeera.com/news/2026/9/18/bomb-attack-at-pakistan-mosque-kills-at-least-15-injures-50)

Closing

The one thing worth remembering today is that the fate of this $14 billion arms sale to Taiwan could well become a bargaining chip at the Trump-Xi summit table. With the Fed and the Bank of Japan raising rates in tandem this week, and the Middle East pipeline attack pushing oil prices higher, the direction of global capital and prices is shifting in response. I'm Muyan, and I'll keep tracking the actual outcome of the Trump-Xi summit over the coming days. See you tomorrow.