The Australian dollar has plunged to a four year low but will need to keep sliding to put a smile on the face of the Reserve Bank boss.

The currency dropped below 86 US cents for the first time in four years early on Thursday morning, and has now shed 20 US cents since April.

Tuesday’s Republican win in US mid-term elections drove the latest fall, as it boosted the value of the greenback.

Falling prices for Australia’s mining exports and the possibility of interest rate hikes in the US next year have been the main factors behind the Aussie’s gradual slide.

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RBA governor Glenn Stevens has long been waiting for the Aussie dollar to fall from what he sees as an overvalued level, which is hampering the economy’s ability to shift away from a dependence on mining investment.

After the RBA’s November board meeting on Tuesday, he again expressed his frustration the dollar was not falling fast enough.

CommSec economist Savanth Sebastian expects the RBA to continue to talk the currency down.

“The Reserve Bank seems more comfortable with the currency being in the low 80s than the high 80s and I think that’s something they will continue to discuss in commentary,” he said.

The US dollar’s overnight surge came as markets assume Republicans will be more business-friendly and will help the US economy grow, BK Asset Management managing director Boris Schlossberg said.

“The Republicans beat even the rosiest projections, winning a clear majority in the Senate and retaining key governorships across the nation,” he said from New York.

Increased demand for the US dollar may also be a bet that the change in legislative leadership would speed up expected interest rate hikes by the US Federal Reserve, Mr Schlossberg said.

Republicans are opposed to the Fed’s low interest rate policies to help the US economy, and Fed chair Janet Yellen is now likely to come under more political pressure to lift rates, he said.

ThinkForex senior markets analyst Matt Simpson expects the Australian dollar to stay in a range between 86 and 89 US cents for the foreseeable future.

LTG GoldRock director Andrew Barnett said the Australian dollar would fall further in the longer term.

“I think the market will focus on that bigger picture for the US economy,” he said.

“It’s not going to happen overnight but we think the overall trend is lower.”