Rubber Declines After Yen Strengthens on BOJ Inflation Target

Rubber dropped for a second day as the Japanese currency strengthened after the Bank of Japan announced open-ended asset purchases and adopted a 2 percent inflation target.

Rubber for delivery in June lost 0.1 percent to end at 311.3 yen a kilogram ($3,497 a metric ton) on the Tokyo Commodity Exchange. Futures have advanced 2.9 percent this year.

The BOJ said it will buy about 13 trillion yen in assets per month from January 2014, including about 2 trillion yen in Japanese government bonds and about 10 trillion yen in treasury bills. The move to double the inflation goal was forecast by 21 of the 23 economists surveyed by Bloomberg. The Japanese yen gained after the outcome, reversing earlier losses. A stronger Japanese currency reduces the appeal of yen-based contracts.

“Investors took cues from the stronger yen to cash in profits after the BOJ announcement,” said Chaiwat Muenmee, an analyst at DS Futures Co. in Bangkok.

The Thai government yesterday approved a plan by Rubber Estate Organization to disburse 5 billion baht ($168 million) from the state-run Bank for Agriculture & Agricultural Cooperatives to continue a purchase program, government spokesman Tossaporn Serirak said. Thailand has spent 17.4 billion baht in buying 182,446 tons from farmers above market rates, he said yesterday.

Rubber for delivery in May rose 1.3 percent to close at 26,110 yuan ($4,197) a ton on the Shanghai Futures Exchange. China imported 2.18 million tons last year, a rise of 3.6 percent on year, according to the Beijing-based Customs General Administration.

Thai rubber free-on-board was unchanged at 98.70 baht ($3.32) a kilogram today, according to the Rubber Research Institute of Thailand.

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