TOCOM hits over 2-year low as firmer yen prompts fresh selling

TOKYO: Benchmark Tokyo rubber futures slid to a 26-month low on Monday, extending losses into a third straight session, as a firmer yen against the U.S. dollar prompted fresh selling.

"The stronger yen weighed on rubber prices especially in early trade," said Satoru Yoshida, a commodity analyst with Rakuten Securities.

The dollar backed off against the yen to 112.72 yen. The greenback lost 0.9 percent versus the yen last week as traders rushed into the safe-haven Japanese currency on concerns over Sino-U.S. trade tensions and political risks in Europe around Brexit and the Italian budget.

A stronger yen makes assets denominated by the currency less affordable when purchased in other currencies.

The Tokyo Commodity Exchange (TOCOM) rubber contract for April delivery  finished 2.3 yen, or 1.5 percent, lower at 155.5 yen ($1.38) per kg.

The TOCOM benchmark, which sets the tone for rubber prices in Southeast Asia, fell to as low as 155.0 yen earlier in the session, its lowest since Sept. 14, 2016.

"But the TOCOM pared some of its earlier losses in late trade as it hit a key support level of 155 yen," Yoshida said, predicting that the market may be hitting the bottom soon.

TOCOM's technically specified rubber (TSR) 20 futures contract for May delivery fell 1.7 percent to close at 141.2 yen per kg.

The most-active rubber contract on the Shanghai futures exchange for January delivery dropped 95 yuan to finish at 11,115 yuan ($1,601) per tonne.

The front-month rubber contract on Singapore's SICOM exchange for December delivery last traded at 122.9 U.S. cents per kg, up 0.1 cent.