THE dollar dropped more than half a US cent after the central bank decided to keep the cash rate at 4.75 per cent.
At 5pm (AEST) today, the dollar was trading at 106.89 US cents, down from 107.53 cents yesterday.
Since 7am (AEST) today, the local unit traded between 106.73 US cents and 107.49 cents.
The Reserve Bank of Australia's (RBA) interest rate decision was widely expected.
Economists said the wording of the short statement that came with the decision was very similar to last month.
CMC Markets foreign exchange dealer Tim Waterer said traders wanted a more definitive statement from the central bank.
"The fact that they held rates steady was no great surprise," he said.
"There was really no change to the rhetoric from previous editions, which didn't really give a clue as to their intentions for July or August in terms of a likely hike or not.
"Naturally the path of least resistance was to the downside and that saw it fall below 107.00 US cents."
Tonight (AEST), there will be a speech from US Federal Reserve chairman Ben Bernanke, which Mr Waterer says will be a chance to get more of an outlook on the US economy and whether the Fed will inject more economic stimulus.
"Traders will be really going over Bernanke's statement with a fine tooth comb, particularly when there is still talk of the quantitative easing phase in the US not being all done and dusted," Mr Waterer said.
"That will potentially have a large impact on how the US dollar fares tonight."
The RBA's trade weighted index was at 77.4, down from 77.7 yesterday.
