The dollar fell on Tuesday amid continuing speculation that the Federal Reserve will lower interest rates, and minutes from the Reserve Bank of Australia indicating that it had wanted to raise its interest higher than it did earlier this month.

The Reserve Bank of Australia, which boosted its cash interest rate for the Aussie dollar to 7 percent earlier this month, released the minutes of its earlier policy meeting today, revealing that that it had considered raising rates higher.

The country is battling higher prices in commodities, which form a significant part of its economy, with higher lending rates. The Aussie reached a three month high against the dollar after the minutes were released.

The Federal Reserve has put inflation concerns on hold as it looks to stimulate the slowing U.S. economy to avoid a recession. The Fed's benchmark rate is currently 3 percent. With low rates in the U.S., investors are seeking money elsewhere.

The Aussie dollar rose nearly 0.9 percent, ending trade at $0.9215 late Monday.

Meanwhile, the dollar fell against the yen. The Japanese currency dropped to 107.46 per dollar from 108.23 late Monday.

The U.S. dollar also fell against the euro to $1.4741 at 11:06 a.m. in New York from $1.4658.

Australia Inflation