Rubber rallied from the lowest level in 16 months as Japan’s currency weakened against the dollar before the U.S. Federal Reserve ends a policy meeting, boosting the appeal of yen-denominated futures.
The contract for delivery in July, the most-active by volume, climbed to 233.1 yen a kilogram ($2,258 a metric ton) on the Tokyo Commodity Exchange by 11:40 a.m. local time. Futures slipped into a bear market yesterday, settling at 226.7 yen, the lowest level since September 2012.
The yen fell to 103.44 per dollar, retreating from a one-month high of 101.77 reached Jan. 27. The Federal Reserve ends its two-day meeting today, with economists polled by Bloomberg Jan. 10 projecting a second $10 billion cut to a bond buying program that has devalued the greenback.
“Expectations for further reduction in the Fed’s bond-buying are weakening the yen and supporting futures in Tokyo,” said Kazuhiko Saito, an analyst at Fujitomi Co., a broker in Tokyo.
Futures fell 21 percent yesterday from a closing high of 286 yen reached on Sept. 9, meeting the common definition of a bear market, as slowing economic growth and rising stockpiles in China signaled weakening demand from the largest consumer of the commodity used in tires.
Rubber for May delivery on the Shanghai Futures Exchange gained 0.2 percent to 15,645 yuan($2,585) a ton. The most-active contract closed yesterday at the lowest since July 2009.
Rubber free-on-board at Songkhla, Thailand, fell 3.3 percent to 72.25 baht ($2.20) a kilogram yesterday, according to the Rubber Research Institute of Thailand.