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Wednesday, August 17, 2022

Rubber Climbs for Third Day on Weaker Yen Before Fed Decision

Rubber advanced for a third day as Japan’s currency weakened against the dollar, raising the appeal of yen-denominated futures, amid expectations the Federal Reserve will maintain economic stimulus.

The contract for delivery in April, the most active by volume on the Tokyo Commodity Exchange, advanced as much as 1.4 percent to 264.8 yen a kilogram ($2,697 a metric ton) and traded at 263.8 yen at 10:20 a.m. The yen weakened to 98.27 per dollar today before trading little changed. It dropped the previous three sessions.

The Fed began its two-day meeting yesterday as data showed consumer confidence in the U.S. fell and an Oct. 22 report revealed growth in American jobs slowed in September. The central bank’s purchases of mortgage-backed securities will be held at $40 billion and Treasury buying maintained at $45 billion, according to Bloomberg surveys of economists.

“Investor appetite for riskier assets increased on expectations that the Fed will maintain stimulus, leading to purchases of the commodity,” said Hideshi Matsunaga, an analyst at broker ACE Koeki Co. in Tokyo. “Futures in Tokyo also drew support from the currency market.”

Rubber for January delivery on the Shanghai Futures Exchange fell 0.1 percent to 19,445 yuan($3,193) a ton. Thai rubber free-on-board was unchanged at 78.15 baht ($2.52) a kilogram yesterday, according to the Rubber Research Institute of Thailand.

Low prices prompted farmers in Thailand’s southern provinces, a key plantation area, to stage a new round of protest. The government ruled out buying rubber from farmers as it will distort the market, and it will maintain direct subsidy payments to growers, agriculture minister Yukol Limlamthong said Oct 28.

Source: Bloomberg

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