Rubber Reaches 14-Month High as Yen Declines, Demand May Grow

By Aya Takada

Dec. 3 (Bloomberg) -- Rubber advanced to a 14-month high for a second day as a drop in the Japanese currency against the dollar raised the appeal of yen-denominated contracts and on speculation an economic recovery will boost raw material demand.

Futures in Tokyo gained as much as 2.9 percent to the highest level since Sept. 29, 2008, extending yesterday’s 2.5 percent rally. The yen weakened as signs the global economy is recovering damped demand for the relative safety of Japan’s currency. Shares of Japanese exporters soared, driving Asian stocks toward the biggest weekly gain since May, as consumer spending lifted most regional economies in the U.S.

“Investors increased purchases of risk assets on optimism global economies will keep recovering,” Hisaaki Tasaka, an analyst at commodity broker ACE Koeki Co. in Tokyo, said today by phone. “The yen’s drop was also positive to the prices of futures in Tokyo.”

Rubber for May delivery, the most-active contract, rose as much as 7.3 yen to 262.9 yen per kilogram ($2,994 a metric ton) on the Tokyo Commodity Exchange before settling at 260.7 yen. Prices gained 92 percent this year.

The yen weakened before reports today that economists said will show the decline in European retail sales slowed and U.S. service industries expanded. The world’s biggest economy expanded or improved “modestly” across the U.S. from October to mid-November as consumer spending rose in a majority of Federal Reserve districts, the central bank said yesterday in its Beige Book.

The yen lost 0.5 percent to 87.80 per dollar at 3:45 p.m. in Tokyo. Japan’s currency strengthened to 84.83 on Nov. 27, the highest since July 1995.

Hyundai Motor Co. and Nissan Motor Co. led the first monthly gain in U.S. auto sales without government stimulus in November, signaling buyers are returning to showrooms as the economy stabilizes. Nissan’s sales rose 21 percent and Seoul- based Hyundai reported a 46 percent surge, according to data from industry researcher Autodata Corp this week.

Rubber futures also increased as gold advanced to a record for a third day, boosting speculation investor demand for commodities will increase, Tasaka said.

Spot gold strengthened as much as 0.9 percent to a record $1,226.56 an ounce before trading at $1,218.64 at 3:46 p.m. Tokyo time. Prices gained as investors sought protection against the prospect of currency debasement and inflation, spurring demand for the metal as an alternative asset.

Rubber for March delivery on the Shanghai Futures Exchange added 1.1 percent to settle at 22,260 yuan ($3,261) a ton.