The Australian dollar is likely to fall to around 70 US cents by the end of the year in response to higher US interest rates and sliding commodity prices, an investment bank predicts.

UBS says the local currency has now reached “fair value” at around 75 US cents and further falls were likely in coming months.

“We continue to expect further Australian dollar/US dollar depreciation ahead,” UBS said.

It cited falls in commodity prices and its expectation the US central bank would raise US interest rates in September and December as key factors in its forecast.

The prediction comes as the Australian dollar was trading around 74.20 US cents on Monday morning, down from 74.69 cents on Friday.

It was still up from last week’s six-year low of 73.92 US cents, following bad economic news out of Greece and China.

Meanwhile in Europe, the stalemate between cash strapped Greece and its creditors drags on.

UBS said if the Australian dollar did move lower, it could contribute to a recovery in the domestic economy’s non-mining sector which is still reflecting weak business investment.

The Reserve Bank of Australia has previously said it would prefer to see the local currency at around 75 US cents.

Some economists believe it need to fall closer to 70 US cents to provide a growth boost.