Peso Plunges to Record Low Amid Fed Rate Hike Fears

The Philippine peso has hit a new record low against the US dollar, closing at 62.625 on Tuesday after shedding 3.9 centavos from its previous finish.

This surpasses the prior record-low finish of 62.59 set on September 4 and marks another decline for the local currency despite the Bangko Sentral ng Pilipinas (BSP) raising its benchmark rate to 5 percent last month.

The peso's weakness is attributed to investors positioning themselves ahead of US inflation data due later this week, with traders pricing in a roughly 60-percent chance of a Federal Reserve rate hike this month. Higher US interest rates could make dollar-denominated assets more attractive, putting further pressure on the peso.