29 Jun 2015

Local market spooked by 'Grexit' fears

1:35 pm on 29 June 2015

Growing fears that Greece is heading for financial collapse have sent New Zealand's shares and the dollar tumbling in early trading.

A Greek government official has confirmed that banks will be closed until 6 July and ATMs will reopen late Monday but with a daily withdrawal limit of €60.

The stock exchange also shut after Greece's international creditors refused to extend a credit lifeline.

Fears of a default caused anxious savers in Greece to empty cash machines and forced Prime Minister Alexis Tsipras to announce the capital controls.

People queue at an ATM outside a National bank branch in a suburb of Athens.

People queue at an ATM outside a National bank branch in a suburb of Athens. Photo: AFP

Analysts expect global markets to be hit hard as investors brace for the possibility of Greece's exit from the euro zone.

The New Zealand sharemarket fell nearly 1 percent in early trading on Monday.

Grant Williamson of Hamilton Hindin Greene said nervous investors were cashing up their shares.

The New Zealand dollar slid to 67.86 US cents - a five-year low - before recovering slightly.

The director of Rankin Treasury Advisory, Derek Rankin, said investors had been surprised by the developments in Greece.

He said they had reacted by selling risk-sensitive currencies like the New Zealand and Australian dollars, and putting their money into safer havens such as the Japanese yen.

The Greek crisis has overshadowed China's decision to cut interest rates and bank reserve requirements, which would normally be good news for the dollar.

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