Rubber Pares Biggest Drop in Two Weeks as BOJ Plan Weakens Yen

Rubber pared the biggest loss in two weeks as the Bank of Japan’s plans to double asset purchases weakened the yen, improving the appeal of yen-based contracts.

The contract for delivery in September on the Tokyo Commodity Exchange fell 1.2 percent to end at 258.7 yen a kilogram ($2,711 a metric ton), the lowest since Nov. 29. Futures earlier fell as much as 3.7 percent, the most in two weeks, and passed the threshold into a bear market on April 1.

The yen weakened the most since October 2011 after Japan’s central bank said it will buy longer-term government bonds as part of its asset purchase program. The European Central Bank and Bank of England are also holding policy meetings today.

“Japan’s stimulus measures raised optimism that the economy will improve and increase demand,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co.

BOJ Governor Haruhiko Kuroda began his campaign to end 15 years of deflation with a strengthened stimulus program that will see the central bank buy 7 trillion yen ($74.3 billion) of bonds a month, exceeding the median 5.2 trillion yen predicted by economists surveyed by Bloomberg News before today’s decision.

Thai rubber free-on-board dropped 1.2 percent to 82.75 baht ($2.82) a kilogram today, according to the Rubber Research Institute of Thailand. That was the lowest level since November 2009, according to data compiled by Bloomberg. Financial markets in China are closed for a national holiday.

Stockpiles monitored by the Shanghai Futures Exchange fell for the first time in nine weeks by 192 tons to 117,504 tons, the bourse said yesterday.

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