Rubber Declines for Fourth Day as Stronger Yen Reduces Appeal

By Aya Takada

Sept. 28 (Bloomberg) -- Rubber declined for a fourth day after the Japanese currency climbed to the highest level in eight months against the dollar, reducing the appeal of yen- denominated contracts.

Futures in Tokyo fell as much as 1.9 percent to 193.8 yen a kilogram ($2,168 per metric ton). Japan’s currency rose on speculation Japan won’t intervene to stem gains in the currency and exporters repatriated profits before the fiscal first half ends this week.

“A stronger yen is the largest drag on the price of futures,” Kazuhiko Saito, chief analyst at Tokyo-based commodity broker Fumitomi Co., said today by phone. “Investors are concerned the yen may appreciate further as the Japanese government looks reluctant to intervene.”

March-delivery rubber closed at 194.4 yen a kilogram on the Tokyo Commodity Exchange, down from the previous settlement of 197.6 yen. It has become the most-active contract after being listed on Sept. 25.

The yen climbed to 89.34 per dollar as of 3:34 p.m. in Tokyo from 89.64 in New York on Sept. 25. Earlier, the Japanese currency reached 88.24, the strongest level since Jan. 23.

Japan’s currency gained on prospects the nation’s exporters are taking advantage of an April 1 rule change that waives taxes on repatriated profits. Under previous laws, companies had to pay a combined 40 percent tax on overseas earnings. The first half of Japan’s fiscal year ends Sept. 30.

Strong Yen

Since coming to office this month, Finance Minister Hirohisa Fujii has said he doesn’t support a “weak yen,” fueling speculation the government won’t resort to intervention to curb the currency’s 17 percent appreciation in the past year. A strong yen can hurt prices as rubber trades globally in dollars.

“Stable movements in currencies are desirable,” Fujii told reporters in Tokyo today. Fujii said he shouldn’t comment on currency intervention and that he was misunderstood as supporting a stronger yen. Central banks intervene in foreign- exchange markets by selling and buying currencies.

Rubber also declined as rising stockpiles in China stoked concern that demand in the world’s largest consumer may slow, Saito said.

Rubber inventories expanded by 6,584 tons to 98,253 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said on Sept. 25. The volume was the highest level since November 2007.

Natural rubber imports by China rose 2.4 percent from a year earlier to 1.15 million tons in the eight months ended Aug. 31, data from the Beijing-based Customs General Administration showed on Sept. 22. The rate of increase slowed from 3.2 percent in the first seven months of this year.

Rubber has gained 43 percent this year as surging car sales in China spurred investor buying. China’s passenger-car sales rose a record 90 percent last month, according to the China Association of Automobile Manufacturers.

January-delivery rubber on the Shanghai Futures Exchange lost 1.2 percent to close at 16,690 yuan ($2,445) a ton.

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