The Australian dollar has dropped to its lowest level in almost five years.

At 0700 AEDT on Monday, the local currency was trading at 80.85 US cents, down from 81.37 cents on Friday.

The Australian dollar fell as low as 80.71 US cents in overnight trade, its lowest level since May 2010.

Bank of New Zealand strategist, Kymberly Martin, said a combination of weak commodity prices and a surging US dollar were weighing on the local currency.

“It’s not specific to the Australian dollar,” Martin said.

“The key theme in the new year has been US dollar strength and that has been represented in declines in most other currencies. So, the Australian dollar seems to be simply suffering from that rather than any specific data.

“We also continue to see quite significant falls in general commodity prices and that’s not a particularly supportive backdrop for the Aussie dollar either.”

AAP