Central European currencies took advantage of better global mood on Wednesday and posted some gains. While the EUR/CZK cross rate has barely changed thus far this year, the zloty and the forint have appreciated significantly. The EUR/PLN currency pair even dipped to two-month lows at EUR/PLN 4.34 level. According to Reuters, recent rally in the zloty was fuelled by hedge funds who were selling EUR/PLN and USD/PLN. Despite the gains, the NBP president Marek Belka said today that the zloty remained undervaluated and that the central bank would be ready to step in the (forex) market. Regarding the Czech koruna, the central bank governor Miroslav Singer said on Wednesday that the weaker than expected koruna (the latest inflation report foresaw the EUR/CZK cross rate at 24.40 on average in Q1/2011) allows the central bank to let interest rates unchanged for a while. We expect that the Czech base rate might remain at current levels throughout this year. Meanwhile, the Czech cabinet voted yesterday to hold a referendum on the issue of adopting the new EU budget agreement. TOP 09 (a coalition party) disagreed on that matter as FinMin Kalousek said the EU treaty would not mean a transfer of powers to Brussels. Nevertheless, president Klaus whose signature is also needed to adopt the agreement already said he would not do so.