TOKYO, Oct 23 (Reuters) – Tokyo rubber futures fell to their lowest in nearly two weeks as concerns over potential tightening in China sent Shanghai rubber prices down and a sharp rise in the yen against the U.S. dollar prompted investors to sell contracts, dealers said.
The benchmark rubber contract on the Tokyo Commodity Exchange for March delivery lost 7.0 yen, or 2.6 percent, to settle at 261.5 yen ($2.66) per kg, the lowest closing price since Oct. 10.
The dollar set an eight-month low versus a basket of currencies on Wednesday after weak U.S. jobs data cemented expectations for the Federal Reserve to keep its stimulus in place until next year, while the yen surged as risk sentiment took a hit.
The dollar fell against the yen to 97.34 yen, down from 98.30 yen late Tuesday.
A stronger yen reduces the value of yen-based rubber in a dollar basis and normally encourage investors to sell rubber futures at TOCOM.
“The rubber prices were battered by weak Shanghai market which was hit by tightening concerns and the yen’s surge in the afternoon added further pressure,” said Jiong Gu, an analyst at Yutaka Shoji Co.
China signalled concern on Tuesday that ample credit could fuel inflation as a report showed house prices jumped the most in nearly three years, with double-digit gains in major cities.
The most-active rubber contract on the Shanghai futures exchange for January delivery dropped 435 yuan to 20,105 yuan ($3,300) per tonne.
“Another reason for weaker rubber prices was slumping Nikkei price,” Gu said.
Japan’s Nikkei share average suffered its biggest decline in three weeks on Wednesday, hit by the dollar’s tumble on heightened expectations the Fed will keep its stimulus in place until early next year.
U.S. employers added far fewer workers than expected in September, suggesting a loss of momentum in the economy that will likely add to the Fed’s caution in deciding when to trim its monthly bond purchases.
The front-month November rubber contract on Singapore’s SICOM exchange was last traded at 231.0 U.S. cents per kg, down 1.1 cent.
($1 = 98.1550 Japanese yen)
($1 = 6.0935 Chinese yuan)
(Reporting by Yuka Obayashi; Editing by Anand Basu)
Source: Reuters
