The Commonwealth Bank of Australia warned on Monday that Greece's expected exit from the eurozone may cause the Australian dollar to plummet below 90 cents. G8 leaders rushed over the weekend to battle the financial crisis to hit the region over the Greek debt.

The fears are not without basis because the Australian currency dipped to its lowest level in almost six months on Friday to 98.24 cents after Moody's downgraded 16 banks in Spain and Fitch Ratings cut Greece's credit rating to CCC over fears that the anti-cost cutting groups in Athens would win the new elections.

Richard Grace, chief strategist of Commonwealth Bank, said the odds of Greece formally exiting from the eurozone became higher in the recent weeks. He foresees the Australian currency declining to 93.95 cents if that scenario would take place.

Just the setting of a formal day for Greece to exit the eurozone is expected to trigger several events that would have a global impact. These includes a third round of quantitative easing by the U.S. Federal Reserve, the Reserve Bank of Australia further cutting the overnight rates by 100 basis points to 2.75 per cent and 10-year Australian yield tumbling down to 2 per cent, Mr Grace said.

On Friday, the Australian sharemarket shed 110.9 points or 2.67 per cent to 4046.5, the largest one-day loss in seven months. Last week, the benchmark S&P/ASX 200 Index had its worst five-day return in nine months when it shed 5.6 per cent.

The stock market crash was also felt in the U.S. as the Dow Jones Industrial Average lost 73.1 points to 12,369.4 and the S&P 500 Index shed 9.64 points or 0.7 per cent to 1295.22.

As a result of the bearish markets, Barclays foreign exchange strategist Aroop Chatterjee forecast that investors would anticipate a period of heightened uncertainty in the coming days, outperformance of safe havens and improvements in the greenback and yen, The Wall Street Journal reports.

However, Bank of England committee member Michael Cohrs said the eurozone crisis unfolds by the hour and it is difficult to foresee where and how the debt contagion would end if the anti-austerity groups win in Greece's June election and trigger an exit from the eurozone.

Mr Cohrs said British banks are robust enough to withstand such as scenario, but added the lenders need to improve their financial strength as the eurozone crisis turns for the worst.

"They have thought about their direct exposures to Greece and they have marked them to appropriate levels, their liquidity is strong and they have enough capital to withstand shocks from Greece, If it goes further it's not clear, and that is why we have been encouraging them to raise more capital because nobody knows where it will stop or it won't stop," The Guardian quoted Mr Cohrs.

Mr Grace said that if only Greece would exit, the Australian currency would probably recover eventually to 105 cents, but if Portugal, Ireland, Spain and Italy would all leave the eurozone, he predicts the Australian dollar would decline to 70 cents. It would be disaster scenario since the five nations comprise 32 per cent of the eurozone's gross domestic product.

Meanwhile, despite the global pessimistic outlook, Australian Prime Minister Julia Gillard said Australians can have confidence in the country's economy because of numerous investments in the pipeline. She made the remarks at the ground breaking rites in Darwin for the start of Inpex's $34-billion liquefied natural gas project.

In spite of the freeze of the European wholesale funding markets, ANZ Bank Chief Executive Mike Smith said the lender has completed most of its fund raising for 2012 because it had two years to anticipate and plan for what is unfolding in Greece and southern Europe.

"While we will see volatility as the European crisis unfolds, the situation is more manageable than 2008 when we had the shock collapse of Lehman's and Australian banks are well placed right now," ABC quoted Mr Smith.