The New Zealand dollar has slipped to a five-month low of US77.7 cents, while the sharemarket has fallen about 0.5% on Tuesday as the eurozone crisis escalates.
Talk of a Greek exit from the euro and mounting worries about Spain's financial stability hit European equity markets hard overnight on Monday and dragged down currencies such as the Kiwi.
A fund manager says New Zealand banks are facing a renewed risk of their offshore funding sources shutting down
Harbour Asset Management director of fixed income Christian Hawkesby says the prospect of the eurozone unravelling, when it was previously thought to be set in stone, is undermining confidence.
He says there are fears that if Greece quits the euro, it could be followed by Portugal and Ireland.
Shares have declined on both sides of the Atlantic, with bank shares the worst hit - particularly in Spain and France. The euro also fell.
Shares have declined on both sides of the Atlantic, with bank shares the worst hit - particularly in Spain and France. The euro also fell, down 1% against the British pound.
Christian Hawkesby says New Zealand would be affected if the wholesale funding markets, which banks use to fund household debt, shut down.