The rand extended its losses against the dollar yesterday after a Greek plan for a referendum on a bailout plan raised worries that the eurozone debt crisis is far from over.

Most emerging market currencies were in the red and the rand - a very sensitive barometer of global risk sentiment - was the fourth-worst performer of 20 units.

It tumbled as much as 3.43%, its heaviest single day decline since September 21. At 12.53pm, it was trading at R8.195 to the dollar, 3.2% weaker than Monday's New York close of R7.937.

"This referendum threatens everything they've been working on," said George Glynos, managing director at ETM.

Germans expressed fury and frustration at Greek Prime Minister George Papandreou's shock decision to call a referendum on the latest aid package, with some saying the gamble would push Greece out of the eurozone.

"You can't help thinking that they should be grateful as Europe is trying to help," said Konstanze Pilge, a 26-year-old student in Berlin.

Papandreou dropped his bombshell on Monday evening, less than a week after European leaders agreed the outlines of a second bailout for Athens.

"It just goes to show once again what a huge mistake it was not to throw Greece out of the eurozone at the start," said Wolfgang Gerke, a banking professor and president of the Bavarian Financial Centre think-tank.

Germany and its partners in the eurozone were taken by surprise by the announcement.

Rainer Bruederle, parliamentary leader for Germany's Free Democrats who share power with Chancellor Angela Merkel's conservatives, suggested Athens was trying to wriggle out of the à130-billion bailout deal, which demands harsh state spending cuts from Greece in exchange for aid.

Papandreou said he needed wider political backing for the measures after a wave of strikes and defections from his party.

A poll over the weekend showed nearly 60% of Greeks have a negative view of the rescue deal, suggesting that voters in the referendum, which is likely to be held early next year, would say no to the rescue package.

"One can only do one thing: prepare for the eventuality of a state insolvency in Greece and if it doesn't fulfil the agreements, then the point will have been reached where the money is turned off," Bruederle told German radio.

"The prime minister had [agreed] to a rescue package that benefited his country. Other countries are making considerable sacrifices for decades of mismanagement and poor leadership in Greece - wrong decisions were made and the country manoeuvred itself into this crisis."

Joerg Rocholl, president of the Berlin-based European School of Management and Technology, said Papandreou's announcement was "surprising and courageous", and could lead to a situation where "Greece can no longer remain a member of the euro-zone".

Greece is due to receive an à8-billion tranche of aid later this month, but is likely to run out of cash again in January, around the time when the referendum would take place.

Papandreou's announcement looks sure to complicate efforts to win public support in the bloc for another rescue and could hamper an initiative to convince banks to accept 50% losses on their Greek debt holdings.

Countries like Germany and Finland may find it difficult to defend funnelling more cash to Athens over the coming months with the threat of the referendum looming.

"If the Greeks say no, it means bankruptcy. It would be a clear 'no' to the euro," said Josef Kaesmeier, chief economist at Munich-based private bank Merck Finck.

"We have got to the point where we can say: if someone doesn't want to be in the club any more, they should go."