Euro sinks to 20-month low after crushing defeat for government referendum in Italy
Just under three years after assuming power, Italian Prime Minister Matteo Renzi has announced his intention to step down.
The euro sunk to a 20-month low against the dollar on Sunday night, and could drop even further according to experts, following a crushing defeat for the government in a referendum on constitutional reform in Italy.
The value of the euro dropped to $1.0505, its lowest since March 2015, on Sunday night, with analysts at RBC Capital Markets in Sydney, according to the Guardian, suggesting that it could drop to as low as $0.80.
“It may sound extreme, but if a second euro zone crisis were to hit, with the US dollar at a much stronger starting point, the euro could arguably trade lower still,” they wrote.
— Europe Elects (@EuropeElects) December 4, 2016
Renzi announced his intention to step down after taking full responsibility for a crushing defeat in a referendum proposing to overhaul the Italian constitution, drastically reducing the power of regional authorities and the upper house Senate in the country.
The populist Five Star Movement and anti-immigrant Northern League parties have responded to the results of the referendum by calling for elections in Italy in what is the latest blow to stability in the European Union following Britain’s decision to leave the EU earlier this year.