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mpc: 5 reaching 14 ½% compared with less than 6% in 1999 Q4, and with PNFC finance from other sources also growing quickly. Deposits made by PNFCs had risen rapidly earlier in the year, possibly related to tax changes which made it less attractive to hold surplus funds overseas, and this increase in corporate balance sheets was something of a puzzle. Although net debt did not appear that high as a percentage of capital stock measured at market values, at replacement cost the net debt ratio was above that of the early 1990s. 17 One possibility was that `distress' borrowing was increasing, but there was little evidence for this from the deposit figures. Another was that investment was buoyant, but this seemed difficult to square with the latest Q2 figures, although it was always possible that the investment numbers would be revised up. A third possibility was that although growth in investment had been sluggish so far in 2000, the level of investment remained high by historic standards; companies might have funded higher investment initially out of internal funds and later, as investment remained buoyant, by borrowing. However, when measured at current prices the share of investment in GDP was not as high as when measured at constant prices, and for these purposes the current-price measure was the more relevant. Finally, it might be that companies were borrowing in order to invest overseas, and that some of this borrowing was held on deposit in the UK ahead of a prospective acquisition. All in all, the continuing combination of heavy corporate borrowing and low reported investment remained a puzzle. 18 While sterling's exchange rate was little changed in effective terms over the past month, there had been some movement in the bilateral rates. In particular, sterling had fallen to a seven-year low against the US dollar, perhaps because the market was becoming increasingly convinced that the recent rapid productivity gains in the United States were sustainable, and that the US economy was now less likely to undergo a `hard landing'. The US dollar had been stronger against a wide range of currencies over the past month, so the weakness of sterling against the dollar was unlikely to have arisen for UK-specific reasons. Sterling had meanwhile appreciated a little against the euro, which had fallen to new lows against the dollar. While sterling had in general not moved with the dollar against the euro in recent weeks, the evidence of a more fundamental delinking of sterling and the dollar remained inconclusive.