The euro dropped to a 20-month low on Monday in Asia as investors digested news that Italian Prime Minister Matteo Renzi would resign after he suffered a humiliating defeat in a referendum over constitutional reforms.

As well, Asian shares started Monday on the back foot with Australia's ASX 200 fell 0.61 percent in early Asian trade, weighed by its energy sub-index, which was down 1.17 percent and its financials sub-index, down 1.15 percent.

In Japan, the Nikkei 225 opened down 0.58 percent, as South Korea's Kospi slipped 0.18 percent. Elsewhere, the NZX 50 fell slightly as Prime Minister John Key said he would resign, citing it as "the right time" as he would not seek a fourth term. The New Zealand dollar neared low of session against the US dollar of 0.7070

In a televised address to the nation, Renzi said Italian voters had shown a clear rejection of legislative reform and that he would meet with his cabinet on Monday and then hand in his resignation to the President Sergio Mattarella, taking full responsibility for the defeat.

The referendum result was more or less what had been expected, but markets were responding to uncertainty about the next steps for Italy's government, Marc Chandler, global head of currency strategy at Brown Brothers Harriman, said to CNBC.

"It wasn't clear that

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First Published:Dec 5, 2016 7:46 AM IST