The New Zealand dollar hovered around $0.579 on Monday, its lowest level in two months, as escalating tensions in the Middle East dampened risk appetite. Iran launched missile strikes against Israel on Sunday, following Israeli airstrikes on the southern suburbs of Beirut in response to alleged Hezbollah attacks. The exchange marked a sharp escalation in regional hostilities, raising concerns that it could derail ongoing diplomatic efforts to resolve the conflict. Further losses in the kiwi, however, were partly cushioned by expectations of tighter monetary policy from the Reserve Bank of New Zealand. Markets continue to price in a possible rate hike as early as July, with the OCR seen to peak around 3.50% late next year.