The Australian dollar jumped 0.88% to 0.7834 US on the news that the RBA is holding official cash rates at 2.25%.
Many market economists had been expecting a further easing in rates which would have brought downward pressure on the Australian dollar.
On the dollar, the RBA remains of the view that the Aussie dollar is still “above most estimates of its fundamental value, particularly given the significant declines in key commodity prices. A lower exchange rate is likely to be needed to achieve balanced growth in the economy”.
The Reserve Bank board left the door open for further cuts, saying: Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target.”