Bloomberg News

Rubber Rebounds From Two-Week Low as Yen’s Retreat Spurs Buying

July 13, 2011

July 13 (Bloomberg) -- Rubber increased, snapping a four- day losing streak, as investors bought back yen-based contracts after the Japanese currency retreated from a four-month high against the dollar amid speculation over intervention.

The December-delivery contract advanced as much as 2.8 percent to 373.2 yen a kilogram ($4,702 a metric ton) before trading at 371.8 yen on the Tokyo Commodity Exchange at 10:42 a.m. Earlier it slid to 362 yen, the lowest level since July 1.

The yen retreated from its strongest level since the last time policy makers jointly intervened in foreign-exchange markets amid speculation Japan will sell its currency to support exporters. Rubber futures also increased after minutes of last month’s meeting by Federal Reserve policy makers stoked speculation that they may consider additional stimulus to sustain the U.S. economic recovery, said Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo.

“The market drew support from the currency market and speculation about U.S. stimulus,” he said today by phone.

Federal Reserve policy makers disagreed on whether additional monetary stimulus will be needed even if the outlook for economic growth remains weak.

“A few members noted that, depending on how economic conditions evolve, the committee might have to consider providing additional monetary stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run,” the Federal Open Market Committee said in the minutes of its June 21-22 meeting, released yesterday.

Forecasts Cut

Policy makers cut their forecasts for growth this year before a July 8 government report showed employers added jobs at the slowest pace in nine months in June. Chairman Ben S. Bernanke said on June 22 growth will pick up as energy prices subside and disruptions to part supplies from Japanese factories ease, while also leaving the door open to additional stimulus.

The yen retreated after reaching 78.50 per dollar today, the strongest since March 17, as concern about Europe’s debt crisis boosted demand for the currency as a refuge.

Group of Seven nations intervened on March 18 after Japan’s currency reached a postwar record of 76.25 per dollar, threatening the nation’s recovery from the March 11 earthquake and tsunami. Japanese Finance Minister Yoshihiko Noda said today yen moves have been a bit one-sided and he is watching markets carefully.

The physical price of Thai rubber dropped 0.7 percent to 141.75 baht ($4.65) a kilogram yesterday, according to the Rubber Research Institute of Thailand.

Thai Weather

Thai producers increased stockpile sales on expectation prices may fall further after weather conditions improved, easing latex tapping in the country’s southern provinces, the group said yesterday on its website.

In Shanghai, January-delivery rubber gained as much as 2 percent to 34,505 yuan ($5,343) a ton before trading at 34,270 yuan at 9:55 a.m. local time.

--Editors: Jarrett Banks, Richard Dobson

To contact the reporter on this story: Aya Takada in Tokyo at atakada2@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net


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