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Wednesday, August 17, 2022

Rubber Climbs From 7-Month Low as Yen Weakens Before Fed Meeting

Rubber rebounded from a seven-month low as Japan’s currency weakened against the dollar before a two-day meeting of the U.S. Federal Reserve starting today, boosting the appeal of yen-based futures.

The contract for delivery in June advanced as much as 1.7 percent to 233.1 yen a kilogram ($2,272 a metric ton) on the Tokyo Commodity Exchange and traded at 230 yen at 12:01 p.m. local time. Futures settled at the lowest level since June 26 yesterday and fell to 226.5 yen earlier today, nearing a bear market.

The yen declined to 102.75 per dollar, retreating from a one-month high of 101.77 reached yesterday. The Fed, which tapered bond buying by $10 billion last month, may consider further cuts to its monthly purchases, economists forecast.

“Sales of rubber futures subsided amid speculation that the yen may weaken further after the Fed meeting,” said Gu Jiong, an analyst at Yutaka Shoji Co., a broker in Tokyo.

Fed officials have been scrutinizing economic data to determine the timing and pace of any reductions to asset purchases. The central bank, which will issue a statement after meeting tomorrow, decided at its December gathering to begin cutting its monthly bond buying to $75 billion.

Rubber for May delivery on the Shanghai Futures Exchange lost 1.1 percent to 15,770 yuan($2,607) a ton. Futures closed at the lowest level since July 2009 yesterday.

Rubber free-on-board at Songkhla, Thailand, fell 1.3 percent to 74.75 baht ($2.27) a kilogram yesterday, according to the Rubber Research Institute of Thailand.

Bloomberg

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