Currently, we only have one country in Europe with double-digit inflation – Turkey, with a rate topping 60%. If this trend continues, we could soon see Turkey’s inflation rate exceed the combined total of the rest of the European countries.
Updates from the US
Yesterday, we received a data package from the US. Among them, the most significant reading was the ISM index for the industry. The results were slightly better than expected, which is undoubtedly good news. However, it’s important to remember that this is still a reading of 47.4 points, which is still below the magical boundary of 50 points. This boundary separates the predominance of positive responses from negatives. The last time the ISM study saw a predominance of positive forecasts was in October 2022. Markets took this data rather calmly, with the dollar slowly gaining strength after its publication.
Strong start in cryptocurrencies
The year started with a sharp increase in the cryptocurrency market, but this was immediately followed by a precipitous drop. For about a day and a half, the rate was above the 45 thousand dollar level, but this lowered back to around 43 thousand following speculations about potential SEC actions. The talk again turned to the possibility of allowing or disallowing a fund based on bitcoin. Recently, any news putting this move off causes a sharp depreciation of the cryptocurrency market, while news bringing it closer triggers further increases.
Inflation in Turkey speeds up again
Yesterday, we received the inflation reading from Turkey. It rose to 64.8%, a symbolic 0.3% lower than analysts’ expectations at this scale. This is currently the highest result in Europe. It’s important to remember that the second-highest rate is 8%, which shows the challenging moment Turkey’s economy is currently in. The country is now in a strong cycle of interest rate hikes, though so far, this hasn’t managed to suppress price growth. It’s worth remembering that Turkey’s 60% inflation rate is sadly not unusual these days; as of November 2022, inflation exceeded 80%. Proportional to inflation, the Turkish lira also loses value. Last year, it lost almost 60% of its value.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl and Walutomat
