Rubber booked a third weekly gain in Tokyo amid speculation that the yen will drop further as Japan’s central bank may agree to double an inflation target after the election of a new government.
Rubber for delivery in May rose 0.6 percent to end at 284.5 yen a kilogram ($3,389 a metric ton) on the Tokyo Commodity Exchange, extending this week’s rally to 2.9 percent. A weaker Japanese currency can raise the appeal of yen-based contracts.
The yen traded near an almost 20-month low against the dollar after the Bank of Japan yesterday boosted monetary stimulus and agreed to review its 1 percent inflation target. Incoming Prime Minister Shinzo Abe asked Bank of Japan Governor Masaaki Shirakawa to agree to set a 2 percent target.
“Futures on Tocom were supported by speculation that the yen will drop further to below 100 per dollar on economic policies by the new government,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said by phone.
Gains in futures were limited after U.S. House Republican leaders canceled a planned vote that would permit higher taxes amid stalled budget talks, boosting concern automatic spending cuts and tax rises may start starting next month.
House Speaker John Boehner yielded to anti-tax resistance within his own party, throwing budget talks into turmoil. House members and senators won’t vote on budget issues until after Christmas, giving them less than a week to reach a deal to avert the tax increases and spending cuts known as the fiscal cliff.
Rubber for May delivery added 0.3 percent to 24,960 yuan ($4,006) a ton on the Shanghai Futures Exchange. Thai rubber free-on-board was unchanged at 96.65 baht ($3.15) a kilogram today, according to the Rubber Research Institute of Thailand.