Taiwan Stocks, Currency Plunge Amid Chip Sector Sell-off

Taiwan's financial markets experienced a significant downturn on Tuesday, with both the stock index and the New Taiwan dollar suffering substantial losses. The benchmark stock index plummeted by over 2,000 points, falling below the 42,000 mark, largely due to a renewed sell-off in chip stocks. Taiwan Semiconductor Manufacturing Company's (TSMC) American Depositary Receipts (ADRs) dropped more than 1%, exacerbating the decline.

The New Taiwan dollar also weakened considerably against the US dollar, depreciating by 1.5角 in early trading to close at 32.423. This marks a significant drop from its brief appreciation the previous day, which was influenced by a temporary easing of tensions between the US and Iran that led to a pullback in the dollar index. The currency had opened at 32.33 and continued to slide, nearing last week's low of 32.49.

Currency traders noted that foreign investors' continued selling activity in the stock market suggests further outflows are likely. The ability of the New Taiwan dollar to hold the 32.4 level will depend on the selling pressure from exporters and potential intervention by the central bank. The market's focus remains on the US Federal Reserve's upcoming interest rate decision and Chair Jerome Powell's post-meeting remarks, with expectations of continued financial market volatility.