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mpc: 4 market, both the number and value of approvals for house purchase had fallen on the month, butthere was uncertainty as to whether this was a stronger than normal seasonal effect around theyear-end. Corporate borrowing also remained strong. There were few signs of significant financialstress in other indicators. While the latest evidence showed that the corporate sector financialdeficit as a percentage of GDP was quite large by historical standards, the special survey conductedby the Bank's regional Agents had found little evidence of distress borrowing, and suggested thatcompanies were borrowing to invest. 13 Exchange rates between the dollar, euro and yen had been volatile over the past month.Although there were further signs of stronger activity in the euro area, there had been continuedsigns of even stronger activity in the United States, so it was perhaps not too surprising that theeuro had remained weak. Some of the recent strength of the yen against the dollar might be relatedto year-end repatriation effects, which could prove temporary. It was perhaps surprising thatsterling had not moved much over this period, despite large movements in other currencies. Thesterling effective exchange rate index had risen a little compared with the time of the Committee'sprevious meeting, but was broadly in line with the assumption underpinning the central projectionin the February Report. However, during the month sterling had reached its highest-ever levelagainst the euro, and a seven-month low against the dollar. Looking over a longer period the riskpremium on sterling relative to the euro might have fallen. 14 If, as the Committee had discussed at a previous meeting, there was a positive correlationbetween the US stock market, corporate sector profitability and investment, and the dollar, then anyfall in the US stock market might be associated with a weakening of the dollar. The Committeenoted that while there had been a fall in the Dow Jones stock market index recently, the NASDAQindex had continued to rise, reflecting the weight and differential movement of new technologystocks. The difference between the performance of stocks in new and old sectors was striking, andwas apparent in the UK and continental European indices too. The Committee also noted thechange in the composition of the FTSE 100, which had led to the inclusion of a number of new ITcompanies. 15 Regarding house prices, both the Halifax and Nationwide indexes showed growth of 15% in theyear to February. The latest Royal Institute of Chartered Surveyors survey indicated that thebalance of estate agents reporting rising prices remained strongly positive in January. There weretentative signs that the rate of increase in some of the southern regions of the UK might be slowingslightly, offset by a corresponding rise in the rate of increase in other regions. As well as the fall inapprovals around the turn of the year, there were also signs that the number of site visits andreservations might be falling. But these indicators might have been affected by the millennium, andit was too early to judge whether activity had in fact slowed. The Committee noted that the rate of