THE dollar was lower yesterday after the Reserve bank kept the door open for an interest rate cut next month, even though it kept official rates on hold for now. At 5pm AEST, it was trading at $US1.0393, down from $US1.0407 on Monday. The currency was at Y=85.32, down from Monday's close of Y=86.36, and at 77.95 euro cents, from 78 euro cents. Commonwealth Bank currency strategist Joseph Capurso said the dollar rose as high as $US1.044 yesterday morning, but tumbled after the RBA's monthly board meeting. The RBA announced it would keep the cash rate on hold at 4.25 per cent, but indicated it could cut rates next month after the publication of the March quarter consumer price index late this month. "At today's meeting, the board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation before considering a further step to ease monetary policy," RBA governor Glenn Stevens said in a statement accompanying the rates decision. Mr Capurso said the prospect of a rate cut made the dollar less attractive to international investors. "So that pushed the Aussie dollar below US104c pretty quickly," he said. He said the dollar could appreciate today after minutes from the US Federal Reserve's most recent policy meeting were released. That was likely to be supportive for the dollar because the minutes might reveal the Fed considered an easing policy.

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