The Philippine peso continued its decline against the U.S. dollar on Tuesday, hitting the 57 level, its lowest level in nearly 17 months.

Compared with Monday's closing price of 56.808, it fell 19.2 sen to finally close at 57, which is the lowest since closing at 57.375 on November 22, 2022.

The latest development comes after tensions escalated in the Middle East after Iran launched explosive drones and missiles at Israel late Saturday, raising the potential threat of a wider regional conflict.

"The dollar closed at 5.5 months on geopolitical risks or heightened tensions in the Middle East after senior Israeli military officials hinted at possible response/retaliation to Iran's drone and missile attacks on Israel over the weekend," said Mike, chief economist at China Banking Corporation. new highs."

He also mentioned that better-than-expected U.S. retail sales data may reduce the possibility of the Federal Reserve cutting interest rates, as well as the latest hawkish signals from Federal Reserve officials.

Coinciding with the peso's depreciation, local stock market indexes hit a four-month low, with the Philippine Stock Exchange Index (PSEi) losing 157.46 points, or 2.40%, to end at 6,404.97, while the broader All-Share Index fell 68.26 points, or 1.96 %, closing at 3,409.85 points.

More than 15.822 billion shares were traded, with a turnover of P6.997 billion. Declining stocks led advancing ones 154 to 41, while 45 stocks were unchanged.

In separate comments, Regina Capital Development Corp. sales chief Lin Linggan said: "The Philippine stock market experienced its biggest sell-off so far this year, hitting the 6,400 level, down 2.4%, as interest rates rose and Iran launched an airstrike on Israel last Saturday. Concerns about escalating tensions in the Middle East have increased.”

PSEi has given up most of its gains this year and is down 0.7% year to date.