TOKYO (Dec 20): Benchmark Tokyo rubber futures plunged more than 3% to a one-week low on Tuesday, dragged down by position adjustments following a slide in Shanghai futures.
The Tokyo Commodity Exchange (TOCOM) rubber contract for May delivery finished down 9.6 yen, or 3.5%, at 266.7 yen (US$2.26) per kg. Earlier in the session, it hit 263.1 yen, the lowest since Dec 13.
“The market has come down by position adjustments as the recent rally had gone too far,” said Toshitaka Tazawa, analyst at Fujitomi Co.
The TOCOM has gained more than 70% since the last week of September, boosting the benchmark to a three-and-a-half-year high.
The most-active rubber contract on the Shanghai futures exchange for May delivery also tumbled 625 yuan to finish at 19,090 yuan (US$2,747.95) per tonne, after touching a low of 18,705 yuan.
“Unless Shanghai futures fall below 19,000 yuan again, and the TOCOM benchmark slides below a technical floor of 264 yen, the market may turn around and try new highs again,” Tazawa said.
On the positive side, the dollar was within sight of a 10½-month high of 118.66 yen touched last week, at 118.24 yen in late Tuesday trade in Asia as fresh buying emerged after the Bank of Japan (BOJ) kept monetary policy unchanged at its meeting ending on Tuesday.
BOJ Governor Haruhiko Kuroda offered an upbeat view of the economy but sought to douse market talk that the central bank may soon consider raising interest rates, vowing instead to keep policy loose to achieve the BOJ’s 2% inflation goal.
A weaker yen makes yen-denominated assets more affordable when purchased in other currencies.
The front-month rubber contract on Singapore’s SICOM exchange for January delivery last traded at 188.0 US cents per kg, down 5.4 cent.
(US$1 = 118.0200 yen)
(US$1 = 6.9470 Chinese yuan)
