The has been one of the worst-performing currencies this year, and if central bank governor Glenn Stevens has his way, the pain is set to continue well beyond the New Year.
In an interview with The Australian Financial Review last week, Reserve Bank of Australia (RBA) chief Stevens said he would like the local currency closer to 85 U.S. cents, a 3 percent drop from its current level of $0.8870.
"When you listen to the likes of Bernanke and other major monetary officials, when they go out on a limb and make a very committed statement related to a currency, they are really going to do what they can to make that happen. When Glenn Stevens is saying 'I really want the AUD to depreciate,' I think Australian investors should be paying attention to that," The Motley Fool's senior analyst, Joe Magyer told CNBC.
(Read more: No respite in sight for the battered Aussie)
Over the past seven days since Stevens' comments, the currency has pushed lower, hitting fresh three-and-a-half year lows in two consecutive sessions and is down 15 percent against the U.S. dollar year-to-date.
While the RBA has left the door open to future easing, as seen in the central bank's recent policy minutes, Stevens made it clear during last Friday's interview that he wants a lower currency to stimulate the economy rather than rate cuts.
(Read more: Has the tide turned for corporate Australia?)
"The RBA would prefer not to [cut rates] with borrowing costs not being a constraint on growth, signs rate cuts have got some traction and limitations on how much monetary policy can do anyway," Shane Oliver, head of investment strategy & chief economist at AMP Capital said in a note.
Meanwhile, several analysts have forecasted steep losses for the currency that go one step beyond the RBA's target.
"In the short term the [Australian dollar] is a bit oversold and may be due for a bounce, but over the year ahead the combination of Fed tapering and RBA jawboning are likely to see its downtrend remain in place," Oliver added. "The [Australian dollar] is likely to end 2014 around $US0.86, but is ultimately on its way down to around $US0.80."
(Read more: Australia sees budget deficit blowout of $42 billion)
Meanwhile, Michael Woolfolk, managing director & senior currency strategist at BNY Mellon told CNBC Asia's "Squawk Box" that he sees the extent of the Aussie's downside to 84 in the near-term.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC