Commerzbank See HUF Weakness Stemming From NBH Policy

On recent HUF underperformance, Commerzbank write:

• HUF underperformance is the consequence of MNB’s pre-announced monetary easing path. There need not be any fresh surprise on a given day. But, that does not mean that the central bank’s stance appears entirely justified to the markets.
• Despite assurances that the central bank would stay cautious, the FX market took away a different message – that MNB will look to continue reducing rates immediately after its special instrument, the 1-day interest rate (currently: 15%), falls to the level of the 13% base rate in September.
• The market’s risk assessment stems from MNB’s inadequate emphasis of the risk factors surrounding inflation, and inadequate assurances of what might make MNB re-consider or abandon the pre-signalled rate cuts.