The failed constitutional referendum in Italy dealt a blow to the single European currency. Italy Prime Minister Matteo Renzi was determined to conduct legislative overhaul, in particular restrict the Senate’s authorities and reduce the number of senators. However, most voters rejected his proposals for constitutional reforms. Following the defeat in the referendum, Matteo Renzi officially declared his resignation.
Experts view the “no” vote as lack of confidence in Renzi’s government and the victory for the 5 Star Movement, which opposes his political and economic reforms. The party campaigns for Italy to abandon the euro that could derail the eurozone’s fragile economic growth. The shared currency is doomed to failure. “We will see the euro weakening only if the euroskeptic stance is increasing to such extent that will create conditions for the referendum on Italy’s exit from the EU. It is wise to say that the time is wrong for buying the euro,” warns Vitaliy Bagamanov, managing director at BKS Ultima. Indeed, the ongoing developments in the eurozone’s third largest economy have caused big market moves. Besides, the euro has come under pressure from growing oil prices. OPEC agreement on production cuts encouraged the oil rally. In response to the “no” vote, the euro slumped to a 21-month low of 1.05 against the US dollar.
