Greece announced on Monday it will shut banks for a week and impose capital controls, pleading for calm after anxious citizens emptied ATM machines in a dramatic escalation of the country's debt crisis.
India’s benchmark BSE Sensex plunged 535.87 points, or 1.92%, to 27,275.97 in opening trade on Monday and Asian stock markets sank as Greece looked set to default on its debt repayment.
The benchmark 10-year bond yield was up 3 basis points at 7.85%, while the rupee was trading at 63.90 compared to its 63.64/65 close on Friday.
In the first market reaction to the growing risk of a Greek euro exit, the single currency tumbled in Asia on Monday morning. Stock markets fell sharply, with Tokyo, Sydney, Shanghai and Hong Kong each sinking more than 2% by Monday afternoon.
Greece’s banks will be closed until July 6 – the day after a referendum on bailout proposals – with a 60-euro ($65) limit on ATM withdrawals, but foreign tourists, a vital engine of the Greek economy, will be exempt from restrictions, said a decree in the official government gazette.
The drastic measures to protect Greece's banking system against the threat of mass panic came after the European Central Bank said it would not increase its financial support to Greek lenders, despite early signs of a chaotic bank run.
It capped a weekend of high drama that began with Prime Minister Alexis Tsipras's unexpected call for a July 5 referendum on creditors' latest reform proposals after bailout talks in Brussels collapsed.
"The more calmly we deal with difficulties, the sooner we can overcome them and the milder their consequences will be," a sombre-looking Tsipras said in a televised address. He promised bank deposits would be safe and salaries paid.