The Australian dollar remains under pressure as concerns remain over emerging markets, and US Federal Reserve winds back its economic stimulus.
At 1200 AEDT on Thursday, the Australian dollar was trading at 87.41 US cents, down from 88.02 cents on Wednesday.
"The Australian dollar is lower after the big falls in stocks and negativity after the US Fed taper," Easy Forex currency dealer Tony Darvall said.
The Fed has said it will cut its monthly bond purchases by an additional $US10 billion, to $US65 billion, as the US economy continues to strengthen.
Also overnight, South Africa's Reserve Bank made a surprise decision to raise its interest rate, amid fears of rising inflation and sustained pressure on emerging market currencies.
On Wednesday, the Turkish central bank doubled its key interest rate to 10.0 per cent.
Concerns about emerging markets caused large falls on global stock markets overnight, dragging the Australian dollar lower.
Mr Darvall said afternoon trade was expected to be quiet as volumes in Asia are impacted by Chinese New Year celebrations.
Meanwhile, Australian bond futures prices were higher.
At 1200 AEDT on Thursday, the March 2014 10-year bond futures contract was trading at 96.050 (implying a yield of 3.950 per cent), up from 95.945 (4.055 per cent) on Wednesday.
The March 2014 three-year bond futures contract was at 97.150 (2.850 per cent), up from 97.070 (2.930 per cent).