TOKYO (Dec 17): Benchmark Tokyo rubber futures rose on Thursday, snapping a five-day losing streak, as a softer yen and higher Tokyo equity market after the U.S. rate hike prompted investors to cover short positions while lower inventories in Japan lent support.
The Tokyo Commodity Exchange rubber contract for May delivery <0#2JRU:> finished 2.4 yen, or 1.5%, higher at 163.4 yen (US$1.34) per kg, recovering from a three-week low hit the previous day.
In a well-flagged move, the U.S. Federal Reserve raised the range of its benchmark interest rate by a quarter of a percentage point to between 0.25% and 0.50%, ending a prolonged debate about whether the economy was strong enough to withstand higher borrowing costs.
The dollar rose against the yen to 122.59 yen as the first U.S. interest rate hike in nine years coaxed investors to emerge from safe-haven currencies.
A weaker Japanese currency makes yen-denominated assets more affordable when purchased in other currencies.
Japanese stocks rose to a more than one-week high on Thursday after the U.S. rate hike.
“The Fed’s rate decision improved risk appetite and helped boost the dollar, share prices and rubber,” said Jiong Gu, analyst at Yutaka Shoji Co.
“A fall in rubber stock also led investors to take fresh buys as they see tightening supply in Japan in early next year,” Gu said.
Crude rubber inventories at Japanese ports stood at 9,088 tonnes as of Nov 30, down 6.7% from the last inventory date, data from the Rubber Trade Association of Japan showed on Wednesday.
“If benchmark breaks through the 161–167 yen range, we may see a strong rally,” Gu added.
The most-active rubber contract on the Shanghai futures exchange for May delivery fell 40 yuan to finish at 10,105 yuan (US$1,559.03) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for January delivery last traded at 115.5 U.S. cents per kg, down 0.2 cent.
(US$1 = 6.4816 Chinese yuan renminbi)
(US$1 = 122.3600 yen)
