The Australian dollar fell US4.40 from Tuesday's Australian close, after dropping by US5.3c in the two previous days. At 5pm yesterday, the Australian dollar was trading at US68.34c, down from Tuesday's close of US72.72c.

It was the Australian dollar's lowest close since September 29, 2003, and the first time it had closed below US70c since September 21, 2004, when it was worth US69.93c.

During the day, the Australian currency traded between US67.65c and US71.57c.

NabCapital currency strategist John Kyriakopoulos said market sentiment continued to sour as hopes were dashed on Tuesday night for coordinated rate cuts by leading central banks to stave off a world recession.

''We were probably hoping for some coordinated interest rate cuts yesterday and they were not delivered. The perception is, the global economy is heading for ruin.

''Equities markets are clearly telling the policy makers they need to cut interest rates by a lot and very soon, otherwise we are going to have a global recession.

''That type of environment is not good for the Australian dollar, which is leveraged to the global economy.

''Understandably, investors are selling the Australian dollar as a result.''

A good barometer of the market's appetite for risk was the Australian dollar/yen cross-trade, Mr Kyriakopoulos said.

Since Friday, the Australian currency has shed 17 per cent of its value in terms of the Japanese currency.

The Australian dollar closed at 68.28 yen, down 8.72 per cent from Tuesday's close of 74.80 yen; and at 50.31 eurocents, down from 53.64 eurocents.

At 4pm, the Reserve Bank of Australia's trade weighted index stood at 57.0, down from Tuesday's close of 58.4.

It was the TWI's lowest closing level since May 8, 2003, when it ended the day at 56.6. AAP