The dollar rises from its lowest level in a month

The US dollar turned higher on Wednesday after two consecutive days of losses as the recent decline in US Treasury yields halted, and the dollar’s rally outpaced the euro and the New Zealand dollar that had earlier surged, driven by an announcement of tight monetary policy from the central bank.

New Zealand’s central bank became the latest central bank to raise interest rates by half a point. Although the move was expected, it also provided a guideline for its future policy, which tends to tighten, arguing that the large and early increase in interest rates reduces the risk of inflation continuing at high levels.

This helped the New Zealand dollar rise by 0.8 percent to a three-week high of $0.6514, but when the US dollar gained momentum, the New Zealand dollar gave up most of its gains and traded with an increase of only 0.2 percent at $0.648.

The US dollar fell by nearly 3 percent after hitting a two-decade high earlier this month, but it has returned, rising 0.4 percent from its lowest level in a month reached earlier this week.

Earlier this week, the dollar witnessed a decline due to statements from European Central President Christine Lagarde, which indicated an end to negative interest rates in the coming months.

These statements imply an increase of at least 50 basis points in deposit rates, fueling speculation that even larger increases will be approved this summer.

Although this lifted the euro to a one-month high of $1.0748 on Tuesday, it fell 0.6 percent on Wednesday to $1.0748.