Rubber Near 16-Month Low as Yen Gains After Fed Cuts Bond Buying

Rubber in Tokyo declined, trading near a 16-month low as Japan’s currency advanced against the dollar, reducing the appeal of yen-denominated futures, after the Federal Reserve cut the pace of bond buying.

The contract for delivery in July fell as much as 1.7 percent to 228.6 yen a kilogram ($2,238 a metric ton) on the Tokyo Commodity Exchange. Futures have lost 16 percent in January, heading for the biggest monthly drop since September 2011. They slipped into a bear market on Jan. 28.

The yen advanced to 102.08 per dollar, nearing a one-month high of 101.77 reached Jan. 27. The Federal Open Market Committee said it will trim monthly bond purchases by $10 billion to $65 billion, citing labor-market improvement and economic growth that has picked up in recent quarters. Asian stocks extended a global sell-off amid concerns the Fed’s tapering may worsen a slowdown in emerging economies.

“A drop in global stocks boosted investor appetite for the yen as a haven, leading to sales of futures in Tokyo,” said Hideshi Matsunaga, an analyst at broker Evolution Japan Co.

Futures fell for an eighth session on Jan. 28, taking losses since the closing high on Sept. 9 to 21 percent, meeting the common definition of a bear market. Slowing economic growth and rising stockpiles in China signaled weakening demand from the largest consumer of the commodity used in tires.

Rubber for May delivery on the Shanghai Futures Exchange lost 1.3 percent to 15,435 yuan ($2,548) a ton. The most-active contract is trading at the lowest since July 2009.

Rubber free-on-board at Songkhla, Thailand, was unchanged at 72.25 baht ($2.20) a kilogram yesterday, 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: Brett Miller at bmiller30@bloomberg.net

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