Matteo Renzi, Italy's now former Prime Minister, resigned in the aftermath of the referendum which had been commissioned to ask people of Italy if they wished to change the Italian constitution. The decision to reject the reforms has created a catastrophic loss for the government and a major victory for the anti-establishment and right-wing parties, such as Northern League and M5S.
The not entirely unexpected defeat, was marked by an astonishing 59.1% of Italians voting against the reforms Matteo Renzi had proposed. The unexpectedly high turnout and decisive rejection of the reforms was later described as a "feast of democracy".
Minutes after Mr Renzi had tendered his resignation, the single currency hit $1.0505, amounting to its lowest level against USD since March 2015. However, Euro bounced back to $1.0634, which amounts to a mere 0.3% fall.
Similarly, shares in Italian banks recovered ground after opening into the red. Monte dei Paschi di Siena, the oldest but yet the most troubled lender in Italy, rebounded into positive territory after going down by 5%. Shares in Unicredit and Intesa also recovered after a steep fall. Ultimately, the cost of borrowing money rose significantly after the Prime Ministers resignation.
According to experts, this could be due to the fact that the market might have taken measures to prepare to cope with the resignation opf the Italian Prime Minister before the referendum was held. This convinced investors to be cautious but to not fall prey to panic.
Even though the aftermath of the referendum does not appear quite as...