TOKYO: Japanese rubber futures rose on Tuesday, recovering from an earlier loss, as a weaker yen against the US dollar prompted buying while worries over low inventories in top buyer China also provided support.
Osaka Exchange's rubber contract for March delivery finished 0.4 yen higher at 227.2 yen ($2.0) per kg, after falling to 224.7 yen earlier in the session.
The rubber contract on the Shanghai futures exchange for January delivery rose 70 yuan to finish at 14,785 yuan ($2,291) per tonne.
"Rubber inventories in warehouses monitored by the Shanghai Futures Exchange stood at lower levels than 5-year average at this time of the year, which has supported the recent rally in Japan and China," a Tokyo-based dealer said.
"The recent yen's decline also made OSE's contracts look cheaper for overseas investors," he said, adding that higher global energy and commodities prices also boosted risk appetite among speculators.
The yen held near its weakest levels versus the dollar in almost three years on Tuesday as a relentless rise in Treasury yields widened the yield advantage in favour of the greenback. A weaker yen makes yen-denominated assets more affordable when purchased in other currencies. The front-month rubber contract on Singapore's SICOM exchange for October delivery last traded at 173.4 US cents per kg, down 0.4%.