Asia This Day:Cyprus Bank Plan Rattles Markets;Australia's Deficit Balloons

Concern over a Cypriot plan to tax bank depositors and its possible contagion effect in Europe caused Asian shares to drop precipitously in early Monday trading.The MSCI Asia Pacific index fell 1.47%,and the ripples extended to US stock market futures,which declined sharply as well.IMF President Christine Lagarde backs the measure as the cost of an EU bailout of Cyprus.The IMF is also considering kicking in some funding to the bailout,but the amount has yet to be determined,Ms.Lagarde said in Algeria.
The banks in Cyprus are closed today for the first day of Orthodox Lent,Clean Monday,but the government is also closing them Tuesday in an effort to squelch a run on the banks.
New Zealand is suffering its worst drought in 30 years,which may cost the nation up to 2 billion dollars.The entire North Island has been declared a drought zone,along with parts of the South Island.The drought will affect New Zealand's dairy exports,which amount to a quarter of the country's exports or 11 billion dollars.
It was raining over the North Island Monday,but not enough to alleviate the drought.
Australian treasurer Wayne Swan warned that the country faces a massive hit as the deficit grew another 4.6 billion dollars in the first four weeks of the year alone.It could swell to 26.8 billion in the first seven months of 2013.Nonetheless,,the government will not cut spending at the cost of growth.The Julia Gillard government faces elections in September,and opinion polls show her being distinctly unpopular.
Finland's Kimi Raikkonen won the Rolex 2013 Australian Grand Prix,the first race of the Formula One season,at Albert Park in Melbourne Sunday.The former World Champion was joined by Fernando Alonso of Spain and defending World Champion Sebastian Vettel of Germany on the podium.
Update:Cypriot banks will remain closed through at least Wednesday as the country's parliament prepares to vote on the deposit tax plan today,Tuesday.Reportedly 60% of the deposits belong to foreigners seeking a tax haven-mostly Russians and Ukrainians.Asian markets bounced back in early Tuesday trading on optimism the crisis will be short-lived.