The Australian dollar tumbled to its lowest level in eight months in Asian trading yesterday after China announced new measures to cool property prices, fuelling speculation that demand for Australia's commodities may weaken.
The dollar was also hit by local data showing building approvals dropped sharply for the second month in a row in January, tempering hopes of a recovery in the housing industry.
At 5pm AEDT it was buying $US1.0125, down more than US1c.
China's announcement of the new measures led to steep falls on Chinese benchmarks, including the Shanghai Composite Index, which dropped as much as 2.9 per cent, and the Hong Kong Hang Seng Index.
The new Chinese rules include higher down-payments and mortgage rates in cities where house prices have risen too quickly, and stricter enforcement of a 20 per cent capital gains tax on property transactions.
That brake on the Chinese economy could temper demand for Australia's biggest exports, namely bulk commodities.