The Australian dollar has hit a four-month low against the greenback on concerns over Japan's nuclear crisis.

Early this morning the value of the dollar fell by 1 cent within half an hour, as investors grow increasingly jittery.

The Australian dollar hit a low of 97.09 US cents shortly before 9:00am (AEDT), after trading as high as 99.63 US cents yesterday.

It had recovered to 97.8 US cents by 10:30am.

The Australian currency also remains close to a six-month low against the Japanese yen - it was at 77.2 yen, as Japanese investors race to bring money back home out of a combination of necessity and panic.

The Australian currency is also traditionally viewed as a risky asset, whereas the US dollar and yen are 'safe havens', even though the two countries have some of the world's worst sovereign debt problems.

St George Bank's chief economist Besa Deda says Australia's status as a 'risky' investment has caused the fall in the local currency.

"One measure of risk aversion is the VIX index - it is sitting just under 30 which is the highest level since July of 2010 - and generally when you see high risk aversion you see money move out of assets that are considered to be riskier," she told the ABC's The World Today program.

She says many conservative Japanese investors are also pulling out of overseas assets to bring their money back home.

"Investors are expecting that repatriation flows will weigh even heavier on the currency over coming months and, obviously, there's also insurance payments that need to be made, and also overseas aid will also support the Japanese yen," she added.

Westpac's chief currency strategist Robert Rennie says the fall in the dollar is a direct result of the worsening nuclear crisis in Japan.

"Whether it's an actual deterioration or whether it's rumour, it's driving these developments," he told ABC News.

"But, at the end of the day, we did see a vicious move lower on the US equity markets closing with heavy losses, and that obviously has seen the Australian dollar being sold quite aggressively in late New York, early Sydney trading."

He says the impact on the local currency has been so significant because Japanese retail investors alone hold a lot of Australian dollars - he estimates around $US27 billion worth.

He estimates total Japanese holdings of Australian dollars are in the range of $US66 billion worth, and an automatic sell-off of some these holdings triggered the dramatic fall.

"This is a margin product - it is subject to automatic stops and automatic cut-outs - and I think what we've seen late in New York and early into Sydney is these positions being automatically cut," he explained.

Besa Deda says she is optimistic that the dollar can make it back to parity, but it may take a while.

"The Australian dollar can certainly get back to parity later in the year, given the underlying economic fundamentals are very favourable in Australia," she said.

However, Robert Rennie says the Australian dollar has been surprisingly resilient so far given the local floods, New Zealand earthquake, Middle East crisis and Japanese earthquake, tsunami and nuclear crisis.

"My concern, and the concern I've been expressing to everyone that would listen to me, was that I think that we had gotten complacent, I think that we had gotten to used to the Australian dollar trading in this parity to 102 [US cent range]," he said.

"Even in a situation where Australia's second-largest trading partner, i.e. Japan, has a very, very serious situation unfolding, I think the Australian dollar is actually doing quite well."