Rubber extended a rally to the highest level in more than seven months, gaining 15 percent in 2012, as Japan’s currency fell to the lowest in more than two years on prospects for additional stimulus to end deflation.
Rubber for June delivery climbed 0.6 percent to 302.5 yen a kilogram ($3,499 a metric ton) on the Tokyo Commodity Exchange, the highest settlement for the most-active contract since May 8. Futures reversed last year’s 36 percent drop on prospects of improving demand and after top producers limited supplies. The Tokyo market is closed from Dec. 31 to Jan. 3 for holidays.
The yen dropped after data showed a fall in Japan’s consumer prices, adding to the case for increased monetary easing by the central bank. A weaker Japanese currency increases the appeal of yen-denominated contracts and helps exporters such as Toyota Motor Corp. boost sales overseas. Japan’s new prime minister, Shinzo Abe, has instructed his ministers to compile emergency economic measures and backed unlimited monetary easing.
“Futures were bought as investors bet the yen’s downtrend will continue into next year under the economic policies of the new Japanese government,” said Hideshi Matsunaga, analyst at broker ACE Koeki Co. in Tokyo.
Rubber, used to make tires and gloves, gained for a fifth straight day, the best streak since September. Most-active prices also booked the fourth weekly advance.
Japan’s consumer prices excluding food fell 0.1 percent in November, data showed today. The Bank of Japan’s inflation target is 1 percent, and Abe has said he may change the law governing the central bank if it doesn’t double its price goal.
Rubber for May delivery added 0.9 percent to close at 26,180 yuan ($4,201) a ton on the Shanghai Futures Exchange. China is the world’s largest rubber user.
Thai rubber free-on-board advanced 1 percent to 99.10 baht ($3.24) a kilogram today, according to the Rubber Research Institute of Thailand. The country is the largest exporter.