Rubber Retreats From Two-Week High as Stronger Yen Cuts Appeal

By Aya Takada

June 1 (Bloomberg) -- Rubber declined for the first time in four days as the appreciation of the Japanese currency reduced the appeal of yen-denominated contracts for the commodity traded globally in dollars.

Prices in Tokyo retreated from a two-week high reached May 29. The yen advanced for a second day against the dollar after the U.S. budget deficit was projected to quadruple to about $1.8 trillion, diminishing the attraction of assets denominated in the currency.

“The strength of the yen is the largest drag on the price of rubber futures,” Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd., said today in a phone interview.

Natural rubber for November delivery, the most-active contract, lost as much as 1 percent to 167.7 yen a kilogram ($1,769 a metric ton) before trading at 168.2 yen on the Tokyo Commodity Exchange at 10:45 a.m. local time.

Rubber also decreased amid speculation General Motors Corp. will file for bankruptcy today, Sugata said.

General Motors intends to file for bankruptcy before 8 a.m. New York time and will name turnaround specialist Al Koch as its chief restructuring officer, according to people familiar with the plans. The U.S. Treasury and GM, battered by almost $88 billion of losses since 2004, prepared the way for a planned bankruptcy filing by getting a majority of bondholders to agree to a revised reorganization plan.

The Congressional Budget Office projects the U.S. deficit will be about $1.8 trillion this year, about four times the previous record, and $1.38 trillion in fiscal 2010.

Rubber for September delivery on the Shanghai Futures Exchange, the most-active contract, gained 4 percent to 15,320 yuan ($2,243) a ton at 9:52 a.m. local time. The exchange was closed for holidays on May 28 and May 29.

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