Rubber Rallies to Seven-Month High as Weak Yen Increases Appeal
Rubber extended a rally to the highest level in more than seven months, gaining for a fifth day, after Japan’s currency dropped to the lowest in more than two years on prospects for additional stimulus to end deflation.
Rubber for delivery in June rose as much as 1.1 percent to 304 yen a kilogram ($3,519 a metric ton) on the Tokyo Commodity Exchange, the highest level for the most-active contract since May 8. Futures, which traded at 302.5 yen at 12:18 p.m. in Tokyo, have gained 15 percent this year on prospects of improving demand and after top producers limited supplies.
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.
A run of five daily gains would be the best streak since September. Most-active prices are also poised for the fourth weekly advance. Rubber is used to make tires and gloves.
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 0.3 percent to 26,025 yuan ($4,176) a ton on the Shanghai Futures Exchange. China is the world’s largest natural-rubber user. The price reached 26,135 yuan yesterday, the highest since May 11.
Thai rubber free-on-board advanced 1 percent to 98.10 baht ($3.20) a kilogram yesterday, according to the Rubber Research Institute of Thailand. The country is the largest exporter.
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