Goldman Sachs: Forint Pressures Triggers (Only A Small) Shift.

Goldman Sachs note that "the Forint's selloff in August - sparked mainly by the upside inflation surprises and some consolidation in the Euro - meant that EUR/HUF traded above 360 at the start of last week, a level that had not been crossed since the height of the Coronacrisis in April. In response, on Tuesday, the MNB intervened through the FX swap facility in order to tighten FX-implied rates and reduce the quarter-end volatility, causing EUR/HUF to fall below 360. The move reaffirms that the MNB is not completely insensitive to a sharp depreciation in the currency, and in the short-term, this reversal may have legs, especially if we see renewed EUR strength post the ECB meeting. But equally this technical fix does not yet signal a significant shift or tightening in the policy stance. Our economists expect inflation to moderate towards the end of the year and into-2021, but with tax-adjusted core inflation, the MNB's preferred measure for gauging inflation pressures, above 4%yoy, concerns about the dovish inclinations of the MNB are likely to persist until numbers actually start heading lower. For investors looking to express positive Europe views through the CEE FX, we continue to prefer CZK and PLN where currency fundamentals are more supportive."