The Italian Prime Minister Matteo Renzi, who has been in office since February 2014 resigned over the weakened when it became clear that the Italian people are overwhelmingly voted in favor of ‘no’ in the referendum held over the weekend. Mr. Renzi has bet his career on the outcome of the referendum on key political reforms, which were passed by both houses of the parliament. After losing the referendum, visibly emotional Mr. Renzi said that the outcome was extraordinarily clear, “We gave Italians a chance to change. It was simple and clear, but we didn’t make it”. He added that he should bear the responsibility of the outcome and announced that he would submit his resignation to the Italian President on Monday. With 69 percent outcome, the ‘no’ camp won 59 percent of all votes.

It was initially expected that the ‘yes’ side would prevail in the referendum but the recent migrant crisis, coupled with weak economic recovery and the funding crisis at Italian banks dent the possibility of the success for Mr. Renzi. The outcome and the resignation of the Prime Minister have triggered a major political instability as the opposition parties have already called for a snap election. One of the opposition parties, the ‘five start movement’ has called for another referendum on the membership of Italy in the Eurozone, if they come to power in the next general election, which is to be conducted before 23rd May 2018.

The euro declined sharply after opening to trade at 20-month low against the dollar to 1.0506. It is currently trading at 1.056.