The Australian dollar fell 4.40 US cents from yesterday's local close, a further decline after falling 5.3 US cents in the two previous days.
At 5pm (AEDT), the Australian dollar was trading at $US0.6832/36, down from yesterday's close of $US0.7268/75.
It was the local currency's lowest close since September 29, 2003
During the day, the local currency traded between $US0.6765 and $US0.7157.
NabCapital currency strategist John Kyriakopoulos said sentiment on markets continued to sour as hopes for coordinated rate cuts by major central banks last night, to stave off a world recession, were dashed.
"We were probably hoping for some coordinated interest rate cuts yesterday and they were not delivered," he said.
"The perception is the global economy is heading for ruin."
Carnage ensued on the Australian share market, which reflected investors shedding riskier assets, with both local indices, the S&P/ASX 200 and the All Ordinaries, closing nearly 5 per cent poorer.
Fellow Asian bourses were hammered with Japan's Nikkei index down 8.4 per cent, Korea's KOSPI 5.8 per cent lower and Singapore's Straits index trading more than 6 per cent weaker by 5pm (AEDT).
"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," he said.
"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."
From 4pm (AEDT) when European markets started trading, the Australian dollar fell 2.88 US cents in 37 minutes before a slight rebound to end the local session at $US0.6832/36.
A very good barometer of the market's appetite for risk is the Australian dollar/Japanese yen cross trade, Mr Kyriakopoulos said.
The Australian dollar closed at 68.24/31 yen, down 8.72 per cent from yesterday's close of 74.77/83.
Since Friday the local currency has shed nearly 17 per cent against the Japanese unit.
"Risk aversion is getting worse, not better," he said.
Mr Kyriakopoulos said unless there was a coordinated rate cut by central banks including the US Federal Reserve, the European Central and the Bank of England, the Australian dollar would continue to fall.
"If we don't see a coordinated interest rate cut we would probably go even lower," he said.
"There needs to be a circuit breaker to a rapidly downward spiral in sentiment towards the global economy and obviously currencies leveraged to it."
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