New Zealand dollar rises further against pound, invesment funds freeze payouts
The New Zealand dollar has made fresh gains against the British pound, after the Bank of England announced plans to contain the fallout from the Brexit vote.
Bank of England Governor Mark Carney has unveiled a plan to boost lending by Britian's banks. But he also raised new concerns about the impact of Brexit on debt-laden British households.
He said the economic risks he had previously warned about have begun to "crystallise".
That prompted investors to sell the pound. By 3pm, the kiwi rose to 55.13 British pence.
The US dollar also made gains. The pound fell to US$1.28, the lowest it has been since September 1985.
The flight to the safety of the US dollar also meant that the New Zealand currency lost value against its American counterpart.
The kiwi was trading one percent lower at 8am, at 71.52 US cents.
The New Zealand dollar was little changed against the Australian currency, at 95.80 cents.
The Bank of England is worried that commercial banks will stop lending to businesses and home owners.
So Mr Carney has authorised the banks to free up £150 billion for lending.
This involves funds that the banks had previously been told to set aside to shore up their balance sheets.
Mr Carney said: "Those UK households and businesses who want to seize viable opportunities... can be confident that they will be supported by the financial system."
But he cautioned that there is only so much that the Bank of England can do to support the UK economy.
The concern about Brexit is already hitting British-managed funds that invest in commercial property.
Three major funds have told their investors they can no longer withdraw their money. Between them they own assets totalling £9 billion (NZ$16 billion).
They include M&G's Property Portfolio (£4.4 billion), Standard Life (£2.9 billion) and Aviva (£1.8 billion).
Investors have been pulling money from managed funds. It is one of the reasons sharemarkets have been sold off.
But commercial property cannot be quickly sold in the way that shares or bonds can be.
So the managers of commercial property funds face a major problem when too many investors ask for their money back at the same time.
Midway through the afternoon: