The Philippine Peso sank to a 17-month low versus the dollar on Tuesday amid rising geopolitical risks and tension in the Middle East, compounded by economic indicators from the United States.

Data from the Bankers Association of the Philippines showed that the local unit reached P57 against the greenback, weaker by P0.192 or 3 percent from its P56.808 finish on Monday.

This was the peso's weakest close since its P57.375-per-dollar finish on 22 November 2022.

The local currency opened the day weaker at P56.85 compared to P56.65 on Monday.

It also traded between P57.00 and P56.85.

The average level for the day stood at P56.971.

Volume declined to $1.100 billion on Tuesday from $1.589 last Friday.

In a Viber message, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort said the local unit closed weaker after top Israeli military officials signaled a possible retaliation to Iran's weekend drone and missile attacks on Israel that were foiled over the weekend.

He added that the Peso weakened on the back of better-than-expected U.S. retail sales data that could reduce urgency to cut Fed rates and the latest hawkish signals from Fed officials (Daly).

"The peso (is) also weaker after the local stock market at new 4-month lows or since 13 December 2023, as U.S. stock markets again mostly lower to new 1-month lows," Ricafort said.

"(The peso also weakened) after the latest hawkish local signals that would delay any local policy rate cut to (first quarter of) 2025 and monetary policy would remain tight for the meantime," he added.