Rubber Futures Pare Advance as BOJ Keeps Policy Unchanged

Rubber pared gains in Tokyo after climbing the most in four weeks as the yen snapped a two-day decline against the dollar after the Bank of Japan kept monetary policy unchanged.

The contract for delivery in November rose as much as 3 percent, the biggest climb since May 10, to 254.4 yen a kilogram ($2,587 a metric ton) on the Tokyo Commodity Exchange. Futures settled at 248.6 yen and have fallen 18 percent this year.

The Japanese currency strengthened against all of its major peers, reducing the appeal of yen-denominated contracts, as some investors had expected the central bank to introduce measures to stem volatility in the nation’s bonds. It refrained from extending the maturity of loans to banks.

“Investors are disappointed with the result of BOJ meeting, prompting them to reduce positions,” said Kazunori Kokubo, managing director Yutaka Shoji Singapore Pte.

The BOJ kept unchanged its plan for a 60 trillion yen to 70 trillion yen annual increase in the monetary base, the central bank said after a two-day meeting today. Twenty of 23 analysts in a Bloomberg News survey either forecast that the BOJ would approve two-year or longer loan operations at the policy meeting or said that such a move was possible.

The yen strengthened 0.4 percent to 98.35 per dollar from yesterday, when it depreciated 1.2 percent.

Thai rubber free-on-board gained 0.7 percent to 88 baht ($2.83) a kilogram today, according to the Rubber Research Institute of Thailand. The Shanghai Futures Exchange is closed for a public holiday.

Rubber prices were supported by concern that rain across Thailand’s southern provinces, the nation’s main production area, has disrupted tapping, said Chaiwat Muenmee, an analyst at Bangkok-based broker DS Futures Co.

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