Korea, Pakistan, Thai Currencies May Fall, Morgan Stanley Says

By Bob Chen

Sept. 4 (Bloomberg) -- Slides in foreign-exchange reserves in South Korea, Pakistan and Thailand reflect the ``negative fundamental outlook'' for those nations' currencies, Morgan Stanley said.

The Bank of Korea sold 8 percent of its dollar reserves, or $21 billion, in the five months through August as the won declined 9.1 percent versus the dollar, according to data compiled by Bloomberg. Pakistan's rupee slumped 11 percent from end-October through June as its foreign-exchange holdings tumbled 39 percent and Thailand's baht lost 5.2 percent in the four months through July as reserves declined 4.9 percent.

``All these central banks have intervened consistently in each of the past five months and have depleted more than 5 percent of their reserves,'' Stewart Newnham, an analyst at Morgan Stanley in Hong Kong, wrote in a research note sent to clients today. The declines ``confirm our negative fundamental outlook on the respective currencies,'' he said.

The Korean won, which yesterday reached a four-year low of 1,159 per dollar, climbed 1.7 percent today to 1,129. The Pakistan rupee was little changed at 76.975 a dollar, having yesterday touched a record low of 77.050. The baht rose 0.1 percent to 34.44 against the U.S. currency, near a one-year low of 34.54 set this week.

To contact the reporter on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net.