TOKYO (March 7): Benchmark Tokyo rubber futures slipped on Wednesday, dragged down by weaker Shanghai futures, and a stronger yen against the US dollar that makes yen-denominated assets less affordable when purchased in other currencies.
The dollar hovered near a 14-month low against the yen on Wednesday, as investors grew cautious about the outlook of the greenback after a top economic advisor to the Trump administration resigned, stoking fears of a trade war.
“Investors unwound long positions to avoid risk given the yen’s sharp gain and falling stock markets,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Global stocks slumped on Wednesday after Gary Cohn’s resignation.
The Tokyo Commodity Exchange (TOCOM) rubber contract for August delivery finished 2.2 yen lower at 191.8 yen (US$1.82) per kg.
“With rubber inventories remaining at high levels in Asia, the market will likely stay under pressure, possibly heading toward February’s lows,” he said.
The TOCOM futures, which set the tone for rubber prices in Southeast Asia, briefly slipped below the 180-yen mark in mid-February.
The most-active rubber contract on the Shanghai futures exchange for May delivery fell 100 yuan to finish at 12,865 yuan (US$2,036) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for April delivery last traded at 146.2 US cents per kg, down 1.9 cent.
(US$1 = 6.3183 Chinese yuan)
(US$1 = 105.6500 yen)
