The peso may continue to depreciate further and could even breach the P59:$1 level if the Bangko Sentral ng Pilipinas hikes rates anew by 50 basis points, an economist said.

"If the Bangko Sentral ng Pilipinas goes on to hike rates by 50 bps in the last two meetings of the year, the differential with the US rate will go back to where it was in July when the BSP did an off-cycle hike," Jun Neri, Bank of the Philippine Islands lead economist said.

"In this scenario, the peso may continue to depreciate and may even breach the P59 level," he added.

This may lead to another inter-meeting hike given the need to temper the depreciation of the peso.

Meanwhile, Neri said that the country's current account deficit reached 6.1 percent of GDP (gross domestic product) in the first half of the year, the widest since 1983 in annual terms.

Countries with substantial current account deficits like the Philippines are usually more vulnerable when the external environment is unfavorable.

Dollars outflow rising

The Fed rate hikes have exacerbated the outflow of dollars, pushing the exchange rate to the P58:$1 level.

For his part, Michael Enriquez, president and chief investment officer of Sun Life Investment Management and Trust Corp.
told the Daily Tribune that "the BSP may continue to hike rates possibly by next month to be able to catch up with the aggressive hikes of the Fed. I think the dollar/peso may reach 59 to 59.50:$1 although we may see some correction soon."