Sept. 25 (Bloomberg) -- The pound fell against the dollar after the Independent newspaper reported the U.K.'s deposit protection scheme may need to draw on cash to protect funds placed with the nation's banks.
The pound slid against 15 of the 16 most-actively traded currencies as the newspaper said the Financial Services Compensation Scheme has only 4.4 million pounds ($8.9 million) to protect funds. The Bank of England agreed to bail out Northern Rock Plc Sept. 14 after the U.K. loan provider requested an emergency credit line, stoking concern other lenders will need cash.
``We could see the pound come off a little bit more,'' said Tony Morriss, a currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. ``The implications for the U.K. economy are quite clear, because any reduction in financing and hedge fund activity will hurt. This raises risk aversion not only for the pound, but for other high-yielding currencies.''
The pound fell to $2.0147 at 10:39 a.m. in Tokyo from $2.0223 late yesterday in New York. It may fall to $2.0080 today, Morriss said. The currency also fell to 231.15 yen from 232.27.
The Financial Services Compensation Scheme took over a 9 million pound fund from its predecessor scheme but this has been reduced through payouts to depositors with collapsed credit unions, the Independent said, without saying where it got the information.
The newspaper quoted a spokesman for the FSCS as saying the scheme could draw up to 139 million pounds by obtaining other funds, which are aimed at covering compensation claims from other areas of the financial services industry.
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