Foreign office budgets hit by demise of sterling

This morning's FT carries a report that shows another side to sterling's slide on the foreign currency exchanges.

According to the paper,

The Foreign Office is scrambling to plug a hole in its budget of up to £150m this year as the recent collapse in sterling threatens to cripple the spending power of its embassies.

Purchasing power was protected until 2007 but what the opposition describes as a “botched experiment” in currency hedging

has left the department facing higher overseas bills than expected.