Rubber surged to a seven-month high after Japan’s Liberal Democratic Party reclaimed power, weakening the Japanese currency on expectations for further stimulus and boosting the appeal of yen-denominated contracts.
The contract for delivery in May advanced as much as 2.3 percent to 282.8 yen a kilogram ($3,369 a metric ton), the highest level since May 14, and traded at 281.6 yen on the Tokyo Commodity Exchange at 10:32 a.m. Futures climbed 6.9 percent this year, rebounding from a 36 percent drop in 2011.
Shinzo Abe’s LDP captured 294 seats in the 480-member lower house of parliament in elections yesterday, while Prime Minister Yoshihiko Noda’s Democratic Party of Japan lost three-fourths of its lawmakers, according to public broadcaster NHK’s vote count. The yen fell to 84.48 per dollar, the weakest since April 2011.
“Investors are betting the Bank of Japan will decide to take additional measures at this week’s meeting after the LDP’s landslide victory,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said today by phone.
The LDP returned to power after three years following a pledge to achieve nominal economic growth of 3 percent and set an inflation target with the central bank of 2 percent.
The BOJ expanded its fund to buy assets such as government bonds and corporate debt by 11 trillion yen to 66 trillion yen in October. Its board will meet Dec. 19-20.
Thai rubber free-on-board added 0.5 percent to 94.1 baht ($3.07) a kilogram on Dec. 14, according to the Rubber Research Institute of Thailand.
Source: Bloomberg
