The euro jumped versus the dollar around 18:48 GMT after Italy’s president Giorgio Napolitano confirmed that embattled Prime Minister Silvio Berlusconi will resign soon after the approval of a new budget law which included the indebted country’s austerity plans. This could be as early as next week as the budget approval would usually take around 7 days.
The euro rose to a US session peak of $1.3846 within minutes of the news by 19:00 GMT.
Berlusconi’s decision to resign came after his centre-right government failed to gather a majority vote in the key vote lower house of Parliament today. The budget managed to pass but without a majority. The results of the vote indicate that Berlusconi’s government no longer has a majority as his governing coalition garnered 308 votes, seven votes shy of a majority needed in the 630 member-lower house of parliament.
This led Italy’s president Giorgio Napolitano to call on Berlusconi to meet to discuss whether he should step down, consequently arriving to that very decision.
Berlusconi has become the highest-profile political victim of the euro-zone crisis that has been ravaging the continent for the past two years. World leaders have been urging the premier to take key steps to reboot Italy’s economy, but the government has repeatedly failed to deliver.