The dollar has fallen for a couple of reasons.

The US economy has been improving in recent months, and experts believe it will continue to improve. As a consequence, the US Federal Reserve looks like it could start tightening its monetary policy sooner than people thought, and that has made the US dollar climb (and the Australian dollar fall).

Australia's terms of trade – the prices we get for our exports relative to the prices we pay for our imports – has fallen much further than experts had forecast in recent months, and that's putting pressure on our dollar too. Our exchange rate is more sensitive to resource export prices than it is to export volumes, and the combination of a further slowdown in Chinese demand for iron ore and a further increased commodity supply is likely to keep pressure on our export ­prices – and hence our terms of trade.

It doesn't mean Australia's economy is weaker. It's a consequence of a stronger US economy, a reconfiguration of Chinese growth, and less favourable global commodity markets.

2.What does it mean for Australia's mining exporters? What about the rest of the mining industry – such as exploration?

Things will be tougher for Australia's mining exporters because they will get less for the things they dig up and sell and it will be more expensive for them to import mining machinery.

On the other hand, foreigners will be willing to buy more of their products because their products will be cheaper. So it's a two-edged thing.

Iron ore miners are already dealing with a dramatic fall in the price of iron ore this year, so it means they'll have to sell more of the stuff to get the same amount of money. But it comes at a time when demand for iron ore has dropped off a lot, so it's a bad combination for them.

Local mining exploration may get a boost because it will be more expensive to explore overseas.

3.What about the rest of the economy – surely there will be winners? Will old-fashioned bricks-and-mortar retailers benefit? Anyone else?

We should all be pretty familiar with this story by now.

The local tourist industry will get a boost because Australians may begin holidaying at home now, rather than heading overseas where it's more expensive. Foreign tourists will find it cheaper to visit Australia.

For retailers, it will be cheaper than it has been for a while for Australians to shop in local department stores or to visit domestic online websites (though old-fashioned bricks-and-mortar stores will still need to do far more to compete with foreign retailers online).

Local education providers will benefit because it will be cheaper for foreign students to come to Australia.

The local film and television industry will become more attractive to foreign producers.

Local manufacturers will feel less pressure from foreign competitors.

The Reserve Bank is happier now the dollar has dropped because it will help with the transition from mining to non-mining parts of the economy. However, it wants the dollar to drop even further.

Exporters will have a better time of it because their goods will be cheaper and therefore more attractive to foreign buyers.  But they will get less for the goods they sell, so farmers won't be liking it.

Anyone who relies on imports for their business will see costs rise, so they won't enjoy it.

4.Will government revenues be hit? How will a lower dollar affect Joe Hockey's already fragile budget bottom line?

It has been estimated that the federal budget will lose between $8 billion to $12 billion from the decline in the price of iron ore this year. However, a weaker currency will help to offset that by boosting the US dollar earnings of Australian companies. A small US1c fall in the dollar can improve a company's revenues by a few hundred million, and any boost to revenues that improves a company's profits will be welcomed by the government.

The government will be happy about a lower dollar because it will see export volumes improve, while imports will decline. Net exports are a big contributor to national income and GDP growth.

In one sense, a lower dollar ought to help Treasurer Hockey's budget bottom line because it will help to stimulate the local economy and boost economic growth at home.

5.And closer to home: will the falling dollar have an impact on Australia's interest rates?

The Reserve Bank wants a weaker dollar, so the more the dollar falls the less pressure there will be on the RBA to keep cutting rates.

Economists think the RBA is at the bottom of its rate-cutting cycle anyway, but a weaker dollar will help to ensure that.

So if anyone wants to know when the RBA will start to lift rates, remember that the more the dollar falls the likelier it is that the RBA will begin to raise rates.

6.How low can the Australian dollar go? In what range would it settle? Will there be a new median?

The dollar has fluctuated between $US0.4775 and $US1.10 since it was floated in 1983, and its 30-year average is $US0.70, so theoretically the dollar can fall much lower.

But in the aftermath of its recent falls currency strategists are trying to figure out how much value it could lose in the current cycle, and where it might settle next.

Some strategists believe the dollar will settle around US0.90c by the end of 2014 and then climb slowly over the next 24 months to finish around parity with the greenback by the end of 2016.

But others believe it will settle around US90c by the end of the year and then fall to about US85c by the end of next year.

Opinions vary, but there seems to be consensus that it won't drop much more beyond US80c-US0.85c for the next year or so.

Why do they think that? Because they're anticipating a modest improvement in iron ore prices over the next few months, that economic conditions in China will eventually improve over the next six months, and that the Reserve Bank will lift the official cash rate by 1.5 percentage points in total by the end of 2016. Those things all support a stronger dollar.

They also are banking on the US economy improving, and Australian fixed-term interest rates rising in the first half of next year.