The New Zealand dollar weakened on Monday as investors increasingly priced in the likelihood of an interest rate reduction by the Reserve Bank of New Zealand (RBNZ). Concerns over slowing economic growth and a cooling housing market have fueled speculation that the central bank will soon act to stimulate the economy.

Analysts noted that recent economic data, including weaker-than-expected retail sales and business confidence figures, have reinforced the case for a rate cut. The RBNZ has previously indicated that it is prepared to adjust monetary policy if necessary to support sustainable economic growth and maintain price stability.

The Kiwi dollar’s decline was further exacerbated by a strengthening US dollar, driven by safe-haven demand amid global economic uncertainties. A weaker New Zealand dollar could provide some relief to exporters but may also contribute to inflationary pressures.

The market will be closely watching upcoming economic data releases and statements from RBNZ officials for further clues about the timing and magnitude of any potential rate cut.