Rubber extended a rally for a second day, reaching the highest level in more than three months, as a depreciating yen increased the appeal of contracts denominated in the Japanese currency.
Rubber for delivery in February on the Tokyo Commodity Exchange advanced as much as 2.9 percent to 286.7 yen a kilogram ($2,878 a metric ton), the highest for a most-active contract since May 23, and traded at 283.7 yen at 11:15 a.m. local time. The rally pared losses to 6.2 percent this year.
The yen slid to 99.70 per dollar, the weakest level in a month, as signs of a global economic recovery sapped investor demand for the currency as a haven. Manufacturing data from Chinahas strengthened the case for a recovery in the world’s second-largest economy and biggest user of rubber.
“Futures are being bought as concerns over the global economy are receding and Chinese data boosted the outlook for demand,” said Kazuhiko Saito, an analyst at broker Fujitomi Co.
The contract for January delivery on the Shanghai Futures Exchange was little changed after yesterday surging 5.3 percent to 21,055 yuan ($3,440) a ton. Thai rubber free-on-board rose 0.3 percent to 84.90 baht ($2.65) a kilogram yesterday, said the Rubber Research Institute of Thailand.
Thailand, the largest producer, will stop collecting fees on rubber exports until Dec. 31 to help boost local prices, according to Office of the Rubber Replanting Aid Fund.
The move will encourage exporters to buy more rubber from farmers, said Prasit Meadsen, the office’s acting director. Thai exporters pay 2 baht a kilogram on rubber shipments.