Australia's dollar fell to an 11-year low this week, hitting 65.43 US cents on Thursday.

Global fears about the coronavirus spreading outside China have contributed to its decline, but they're not the only reason.

What's going on?

The dollar has been weakening for 12 months

Australia's dollar has been slowly losing value since February last year.

The decline began after Reserve Bank governor Philip Lowe delivered a speech in Sydney conceding Australia's economy had weakened towards the end of 2018 and more interest rate cuts may be needed in 2019.

At the time, Australia's dollar was sitting around 72.40 US cents. It started losing value almost instantly.

Why would the dollar lose value when the RBA cuts rates?

If Australia's interest rate declines relative to the interest rates in the United States, it becomes less attractive for investors to keep their money in Australian dollars compared to US dollars, and that puts downward pressure on Australia's currency.

The RBA ended up cutting Australia's interest rate three times last year, from 1.5 per cent to a historically low 0.75 per cent, creating a lead weight for Australia's currency.

At the moment, the effective US federal funds rate is a touch over 1.5 per cent.

"These are unprecedented rates for Australia," Westpac senior currency strategist Sean Callow told the ABC this week.

"That's been the main driver of the downswing in the currency I'd say."

Trade tensions between the US and China

Trade tensions between the world's two largest economies have also weighed on Australia's dollar.

In mid-July last year, the currency appeared to stabilise around 70 US cents.

But it plunged again in August, to below 67 US cents, when US President Donald Trump began threatening to put fresh tariffs on China.

Why? Because Australia has more to lose than most countries from US-China trade, given its economy is tied in tightly with both economies.

After that mid-year battering, Australia's currency enjoyed a slight reprieve in December and January when it appeared trade tensions were easing.

In December, the so-called "Phase 1" deal between both countries was pre-announced by Mr Trump — with few details — and it helped Australia's dollar close the year on a positive note, around 70.20 US cents.

But that reprieve didn't last.

The bushfires saw the dollar cross an important threshold

Come January, once Australia's bushfires turned catastrophic, analysts globally began revising down their immediate growth forecasts for Australia's economy.

The fires had come on top of data showing the economy had ended 2019 sluggishly.

On January 2, Australia's dollar was trading at 70.17 US cents, but it fell below 70 US cents that day and it hasn't recovered.

Now we come to coronavirus

In such a jittery environment, fears of the coronavirus outbreak in recent weeks have pushed Australia's dollar to an 11-year low.

It hasn't been this low since March 2009, when the S&P500 (an index of 500 large companies listed on stock exchanges in the US) bottomed out after the global financial crisis.

What does it mean for Australia's economy?

A lower Australian dollar typically benefits Australia's exporters, and it certainly boosts the profits of mining companies.

A lower dollar also helps Australia's education sector, and its tourism operators.

Domestic tourism operators benefit because it makes it cheaper for Australians to travel locally rather than overseas.

But the coronavirus has complicated matters — since the outbreak has occurred in China, one of Australia's major trading partners, it has severely interrupted supply chains for Australia's exporters, importers and manufacturers, and the Government's travel bans on Chinese tourists and students coming to Australia have hit the tourism and education sectors hard.

How long will the dollar remain in the doldrums?

It's a fool's game trying to predict how a currency will behave in the medium-term.

But currency strategists say it's hard to imagine scenarios in which Australia's dollar will strengthen in coming months, particularly because the Reserve Bank is likely to cut interest rates again this year.

They say it's more likely the dollar will fall further from these levels, but the fact the coronavirus has stopped spreading in China will be welcomed by traders.

"The coronavirus impact on China is easing as daily activity indicators suggest an economic recovery has started," Commonwealth Bank analyst Vivek Dhar said.

Is there anything Australians can do about the low dollar?

Consumers can't do much to influence the value of the dollar, but they can use a lower dollar to their advantage.

"If you're looking for places where your Aussie dollar still has some spending power, Vietnam and Indonesia would be reasonably attractive," Mr Callow said.

"If you're not the jittery type, if you're willing to take a little bit of risk, there'd be some great opportunities in the places where regional tourism has fallen steeply, like Thailand.

"There'd be a lot of room on your plane, there'll be fantastic discounts on hotels, I've seen cruise ships that are discounting heavily because they have to avoid a whole bunch of ports they'd normally visit.

"Or if you wanted to help with the recovery of Australian towns hurt by the bushfires, you could travel domestically."