Wordpress rewrite rules conflicting with real paths and filenames - php

Question

I'm recreating my employers website, it currently uses WordPress,
I have created a new directory within the /public_html/ folder named dev. While the dev folder is empty - It will display directory contents as expected. The moment I throw an index.php file in there, I get sent back to a 404 error.
The contents of index.php is simply <h1>Working</h1>
Looking into the .htaccess of the primary directory
# BEGIN WordPress
<IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /
RewriteRule ^index\.php$ - [L]
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /index.php [L]
</IfModule>
It appears that it should already be ignoring the rule if the requested filename is infact a real file or directory.
The entire .htaccess file.
RewriteEngine on
IndexIgnore .htaccess */.??* *~ *# */HEADER* */README* */_vti*
<Limit GET POST>
#The next line modified by DenyIP
order allow,deny
#The next line modified by DenyIP
#deny from all
allow from all
</Limit>
<Limit PUT DELETE>
order deny,allow
deny from all
</Limit>
AuthName ant.com.au
# BEGIN WordPress
<IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /
RewriteRule ^index\.php$ - [L]
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /index.php [L]
</IfModule>
# END WordPress
<Files 403.shtml>
order allow,deny
allow from all
</Files>
Definitely looks like there should be no conflict whatsoever trying to navigate to a literal directory and/or file
Any help is greatly appreciated

Answer 1

This was actually very simple to fix:
I just added a rewrite condition: RewriteCond %{REQUEST_URI} !^/dev/
Full rewrite:
<IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /
RewriteRule ^index\.php$ - [L]
RewriteCond %{REQUEST_URI} !^/dev/
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /index.php [L]
</IfModule>