Rubber Extends Rally on Weaker Yen as Japan Approves New Premier

Rubber extended rally to a seven- month high as Japan’s currency weakened to the lowest since April 2011 after Shinzo Abe became Japan’s new prime minister, promising more stimulus.

Rubber for delivery in June climbed 1.3 percent to end at 296 yen a kilogram ($3,471 a metric ton) on the Tokyo Commodity Exchange, the highest settlement for the most-active contract since May 8. Futures have gained 12 percent this year.

The yen weakened past 85 per dollar as the lower and upper houses of parliament approved Abe’s nomination today. Abe said he will consider changing the law governing the Bank of Japan (8301) unless it boosts its inflation target next month. A weaker Japanese currency can raise the appeal of yen-based contracts.

“Expectations grew that Abe will take stimulus measures to lift the economy from deflation,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said by phone today.

One BOJ policy maker had embraced the idea of open-ended monetary stimulus as early as last month, according to a record of the Nov. 19-20 board meeting released today in Tokyo. Abe agreed with a coalition ally on a policy package that includes “bold monetary easing” to reach inflation of 2 percent.

Rubber output in Indonesia, the largest grower after Thailand, may decline for the first time in four years in 2013 as the country limits output and shipments in coordination with other producers to support a rally. Production may decline 8.9 percent to 2.77 million tons from an estimated 3.04 million tons this year, according to Agriculture Minister Suswono.

Exports from Vietnam, the world’s fourth-biggest shipper, in 2012 were estimated at 1.02 million tons, up 25 percent from a year earlier, Ministry of Agriculture and Rural Development said in monthly report posted on its website.

Rubber for May delivery gained 0.3 percent to close at 25,320 yuan ($4,061) a ton on the Shanghai Futures Exchange. Thai rubber free-on-board advanced 0.5 percent to 97.10 baht ($3.17) a kilogram, according to the Rubber Research Institute of Thailand.

To contact the reporter on this story: Aya Takada in Tokyo at atakada2@bloomberg.net

To contact the editor responsible for this story: Jake Lloyd-Smith at jlloydsmith@bloomberg.net

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