The New Zealand dollar tumbled from its closing highs last week as the European Union's €10 billion (NZ$15.8b) bailout of Cyprus sent global risk sentiment spiralling downward.

The kiwi recently traded at US82.30 cents, up from US82.05c at 5pm on Friday, and was unchanged at 75.50 on the Trade Weighted Index of major trading partners' currencies.

The local currency had risen as high as US82.90c at the close of trading last week, after the US winning streak was tarnished by cooling manufacturing data and flagging consumer confidence.

But as trading resumed this morning, the kiwi dropped dramatically on the negativity surrounding Saturday's political turmoil.

Cypriots have made a run on the banks after learning that one of the conditions of the bailout was a 10 per cent tax on deposits.

ASB Institutional head of FX sales Tim Kelleher said the bailout was necessary to prevent Cyprus from being bankrupted and ejected from the fragile European Union.

"You've seen the risk currencies get hit very hard this morning," he said.

European equities were also likely to see a significant selloff when markets opened.

Kelleher said the kiwi was likely to enter a period of consolidation, and any rebound would be governed by reaction from the rest of the EU and from equity markets.

On the crosses, the kiwi recently traded at 79.54 Australian cents, up from A79.12c at 5pm on Friday, and 78.80 yen, down slightly from 78.83 yen. It opened at 63.58 euro cents, up from 63.05 euro cents, and 54.37 British pence, from 54.34p earlier.

Kelleher said the kiwi was likely to spend the day on the back foot, trading between US82c and US82.50c.

- © Fairfax NZ News