The Philippine peso weakened against the dollar on Monday as market participants positioned themselves ahead of the central bank's policy meeting this week, where a third consecutive rate hike is widely expected.

The currency fell six centavos to close at P61.73 per dollar, down from P61.67 on Thursday, according to data from the Bankers Association of the Philippines' website.

The local unit opened Monday's session weaker at P61.75 against the greenback. It slid to an intraday low of P61.79, while its strongest level of the day was P61.688.

Trading volume thinned, with dollars exchanged falling to $970.2 million from $2.115 billion previously.

A trader said in a phone interview that the peso declined after trading mostly sideways against the dollar, as the market awaits the Bangko Sentral ng Pilipinas' (BSP) policy decision due Thursday.

A BusinessWorld poll showed that 19 of 24 analysts expect the Monetary Board to raise the target reverse repurchase rate by 25 basis points (bps) for a third straight meeting this week, as inflation remains elevated. The reverse repurchase rate is the BSP's key policy rate, anchoring short-term borrowing costs and, through them, the pricing of loans and deposits across the economy.

The Monetary Board has delivered cumulative rate increases of 50 bps since April, bringing the policy rate to 4.75%. The BSP aims to keep inflation within its 2-4% target.

BSP Governor Eli M. Remolona, Jr. has said the central bank stands ready to adjust its monetary policy stance as necessary to bring inflation back to target amid broadening price risks, particularly with the Middle East conflict still unresolved. However, weak Philippine economic growth has eased some of the pressure on the central bank to take aggressive action. Currency weakness is among the price risks policymakers monitor, as the Philippines runs a structural trade deficit and imports much of its fuel and food, so a softer peso raises the local-currency cost of those imports. The unit draws longer-term support from steady dollar inflows, led by remittances from overseas Filipino workers and business-process outsourcing revenues, which rank among the country's largest sources of foreign exchange.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso also declined as players waited for news of new sanctions to be announced by the United States against Iran.

For Tuesday, the trader sees the peso ranging from P61.60 to P62 against the dollar, while Mr. Ricafort expects it to move between P61.60 and P61.80. Attention then shifts to Thursday, when the Monetary Board's decision will be accompanied by its policy statement and Mr. Remolona's comments, which typically outline the outlook for further moves.

— Aaron Michael C. Sy