NEW YORK, July 29: The dollar surged to a one-month high on Tuesday as a sharp drop in crude oil prices and an unexpected rise in US consumer confidence in July buoyed demand for riskier assets and sparked a rally on Wall Street.

Analysts said Merrill Lynch’s announcement late on Monday of yet another write-down and capital-raising exercise also helped support the dollar, as they raised hopes the turning point in the year-long credit crisis was close.

“It’s a combination of oil, equities and the slight improvement in consumer confidence. The (light) summer liquidity conditions could be a factor as well,” said Vassili Serebriakov of Wells Fargo in New York.

The dollar index, which measures the dollar’s performance against a basket of six currencies, jumped to 73.333, its highest since June 25, according to Reuters data.

It was last around 73.318, up 0.9 per cent on the day.

Declining oil prices and news that French consumer confidence plunged to a record low for the seventh straight month in July kept investors away from the euro.

The currency dropped as low as $1.5577. It was last trading at $1.5579, down 1.1 per cent on the day.

The dollar rose 0.7 per cent to 108.19 yen as US stocks rallied on the slide in crude oil prices. The yen was also hurt by news that Japan’s jobless rate rose in June to a near two-year high and household spending fell again from a year earlier.

Sterling fell 0.7 per cent to $1.9795, weighed down by a report showing British retail sales fell at a record annual pace in July, while approvals for new mortgages hit a record low last month, offering further proof that a deteriorating housing market is battering the overall economy.—Reuters