SINGAPORE: Japanese rubber futures rose for a sixth straight session on Tuesday in the contract’s longest rally since September, after China’s currency intervention spurred hopes for more stimulus aid and weak Asian currencies raised risk appetite.
Osaka Exchange’s rubber contract for January delivery finished 0.6 yen, or 0.3%, higher at 200.7 yen ($1.38) per kg. The rubber contract on the Shanghai futures exchange for January delivery also rose 70 yuan to finish at 13,050 yuan ($1,791.28) per metric ton, up for a fourth consecutive session.
Japan’s benchmark Nikkei average closed 0.92% higher. “China’s yuan-fixing actions signal potential economic support, though fundamentally little has changed,” said a Singapore-based trader. China’s major state-owned banks have been active in both onshore and offshore foreign exchange markets in recent weeks to arrest rapid yuan declines.
Earlier this week, the central bank vowed to coordinate financial support to resolve local government debt problems, and cut the one-year benchmark lending rate.
The Japanese yen has also been hovering near a nine-month low of 146.56 since last week, and last traded at 145.87 against the dollar on Monday. A weak yen makes assets dominated by the currency more affordable for overseas buyers.
Japan’s threshold for currency market intervention on the yen is likely to be around 150 per dollar, investment bank JPMorgan’s analysts said. * Still, seasonal pressure on rubber prices due to lower demand and increased supply of raw materials necessitates continued monitoring, the trader added.
Asian stock markets snapped an eight-day losing streak, helped by a rebound in beaten-down Chinese shares, while benchmark Treasury yields scaled 16-year highs.
The front-month rubber contract on Singapore Exchange’s SICOM platform for September delivery last traded at 129.0 US cents per kg, up 0.3%.
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