The Canadian dollar has slid in response to the shock dismissal of the country's finance minister.

Paul Martin was sacked in a cabinet reshuffle on Sunday following a clash with the prime minister, Jean Chretien.

The dismissal of Mr Martin, credited with taming crippling budget deficits and pushing through economy-boosting tax cuts, unnerved financial markets.

Early on Monday, one Canadian dollar was worth $0.65, 0.56% lower than late on Friday.

"This is a finance minister (who) ... enjoyed a very, very high level of credibility in the market," said Benjamin Tal, senior economist at CIBC World Markets.

"The dollar will suffer, no question about it."

Political rivalry

The prospect of a bout of political in-fighting within the Canadian government in the wake of Sunday's surprise cabinet reshuffle also weighed heavily on the country's currency.

The Canadian dollar's losses have partially reversed hefty gains since April, fuelled by a string of strong economic data.

Mr Martin's dismissal came just days before he was due to host a meeting of finance ministers from the Group of Seven industrialised nations on 14 and 15 June.

Mr Martin's replacement, former deputy prime minister John Manley, has signalled that he will maintain his predecessor's policy of balanced budgets and lower taxes.

Mr Martin and Mr Chretien have been bitter political rivals since the two men contested the leadership of Canada's Liberal party in 1990.