The Australian dollar must fall further for Australia to be competitive in international trade, a leading fund manager has said.
John Abernethy, chief investment officer at Clime Asset Management says the deterioration of Australia's trade deficit by 100 per cent in just six months to $16.5 billion was "alarming" considering the Australian dollar's 10 per cent fall against the United States dollar in the same period. 
The slide in Australia's trade performance continued, while the Australian dollar had failed to offset the fall in commodity prices, he said.
"The current annual trade deficit run rate of over $30 billion will ensure that Australia's current account [which includes net interest paid on foreign debt] will stay firmly in the red and that our GDP will stay at sub-optimal levels," Mr Abernethy said.
The Australian dollar would continue its depreciation cycle despite the recent rally, he said.
"The best long-term guide for the value of the Australian dollar remains the terms of trade and the trade account," he said.
"Neither of these is showing any significant improvement and indeed, the trade account is getting worse."
On Wednesday, the Australian dollar tumbled following nine straight days of gains, falling more than 2 per cent after weak import data from China was compounded by an announcement from Westpac it would increase home-loan rates by 20 basis points.
In late trade on Wednesday, the Australian dollar was buying US72.42Â¢, down from US73.82Â¢ on Tuesday.
The Aussie briefly slid to US71.99Â¢ shortly after the Westpac announcement . The rate rise on owner-occupier and investor loans comes into effect on   November 20 and will help it meet capital requirements laid out by the Australian Prudential Regulatory Authority, the bank said.
"This move, especially if followed by other major banks, is likely to dent consumer and property investor confidence, at least initially," CMC Markets chief market analyst Ric Spooner said.
"This bank rate hike represents a degree of tightening, which may increase pressure on the RBA to cut official rates in future."
The news increased speculation the Reserve Bank of Australia would cut interest rates again at its   November meeting. Credit Suisse calculations on Wednesday showed markets were pricing in a 57 per cent chance of a rate cut at the RBA's meeting..
The Australian dollar had already been under pressure overnight, as disappointing trade data from China snapped a rally in riskier assets.
"In the five days through this Monday, the Australian dollar had been the best-performing major currency, rallying by just shy of 4 per cent against the US dollar," National Australia Bank global co-head of FX strategy Ray Attrill said. "In the 22 hours since then, it has been the worst performing, losing 1.3 per cent."