The Russian ruble hits record low

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Regional PMIs surprise on the upside

The Russian ruble hits record low

Purchasing Manager’s Indices surprised positively in Hungary as well as in Poland in September. PMI in Hungary, which is calculated with a different methodology proved, that it suffers large volatility and no strong conclusion could be drawn from the data for a single month. After the fall last month, PMI in Hungary again rise to 52.6, which corresponds with latest industrial production data showing that manufacturing sector has been growing substantially. In Poland, although the PMI remains below the 50 level - indicating contraction – the September data showed that pace of the contraction was slowest in three month. Recalls that Polish PMI rose from 49.0 in August to September’s 49.5. Also the Czech PMI exceeded expectations, when it reached 55.6. So to sum up, despite poor business figures in Germany regional PMIs have managed to bring a positive surprise and might help regional currencies to firm.

In contrast to CEE currencies, the Russian ruble is experiencing bad times. Yesterday the ruble eased to historical low and exceeded the threshold 44.40 against currency basket EUR and USD, beyond which there are no limits for intervention. Surprisingly, based on official CBR statistics, there were no FX operations of CBR yesterday. The ruble’s fall was caused by rumours that Russia is considering capital controls to stem the flow of money out of the country. Although the central bank together with Finance Ministry later denied these speculations it is obvious that capital outflow has been a serious problem, which Russia has been currently facing. Net outflows of capital by private sector has already reached USD 75bn in the first half of this year, which is considerably higher than last year when capital worth of USD 61bn led away. Recall that the idea of introducing capital controls was already mentioned by Sergei Glazev, an adviser of the president Vladimir Putin. He recently proposed to impose tax on money flowing abroad. In spite of the CBR denial, we could not totally rule out that if the situation worsens the capital controls could be still implemented.