The Australian dollar has undergone a "fundamental correction", falling to its lowest level in 20 months as investors reassess the currency amid growing concerns about the economy.
The dollar slipped past US95¢ on Thursday despite data showing that Australian exports to China reached a new peak.
Once the poster child for currency strength, the dollar has shed 10 per cent of its value since it went above US105¢ in January. It was trading at US94.79¢ late on Thursday. It was lower against other currencies, trading at ¥94.10, 61.44 pence and 72.35 euro cents.
"I would describe this as a fundamental correction. I don't think this is an endless spiral," Westpac chief currency strategist Robert Rennie said.
"I think we are re-addressing the overvaluation of the Australian dollar and that with time we will find some stability. But I still think it can go a bit lower in the short term."
Adding to pressure, the head of the Treasury, Martin Parkinson, called on the Reserve Bank to put aside its focus on maintaining inflation within its target band and cut interest rates to stimulate the economy.
Dr Parkinson, a RBA board member, said the central bank should "look through" the possible inflationary impacts of a falling dollar.
The latest currency falls came as Australia's trade balance recorded its third consecutive monthly surplus. Australia had a trade surplus of $28 million in April, following a surplus of $555 million in March.
Investors have become increasingly bearish about the dollar amid questions about quantitative easing in the US and Japan, soft Chinese data, weak commodity prices and fears the local economy was not sufficiently rebalancing.
London-based Insight Investment currency head Paul Lambert said he was "short the Aussie dollar" as Australia had "reached a new point in its path".
"Its interest rates are going to start to move toward the rest of the world," Mr Lambert said.
RBS senior currency strategist Greg Gibbs said the weakness in the gross domestic product figures on Wednesday were supportive of investors' theme that the economy was not yet moving towards non-mining-led growth.
"The bigger picture sentiment for the [Australian dollar] has now clearly downshifted and recent economic reports in Australia have deteriorated," Mr Gibbs said.
The long-term outlook for the Australian dollar-British pound cross was looking bearish, he said, and a reflection of the contrasting service sectors in Australia and Britain. Australia's service PMI fell for the second month while the UK's services PMI reached its highest since March 2012.
The dollar weakness was also pulling down local stocks as foreign investors exited the Australian sharemarket, RBS Morgans trader Luke McElwaine said.
Those investors were likely to return if the dollar stabilised in the low 90s, Mr McElwaine said.
The sharemarket has unwound most of its gains this year. It was about 11.7 per cent higher since the start of the year until May 14, where it hit a 2013 high of 5220.987. Then it fell, losing about 8.5 per cent in the past three weeks.
Mr Rennie said the speed at which the US dollar-yen moved higher left an "enormous vacuum" in liquidity that the markets had become used to since various governments began money-printing quantitative easing programs.