TOKYO: Japanese rubber futures rose to a 3-1/2-week high on Monday, as a recovery in automobile sales in Japan increased prospects for stronger tyre demand while the yen’s decline to a fresh one-year low prompted buying.

The Osaka Exchange (OSE) rubber contract for April delivery settled 3.0 yen, or 1.1%, higher at 267.7 yen ($1.8) per kg. The contract touched its highest since Oct. 19 of 268.9 yen earlier in the session. The rubber contract on the Shanghai futures exchange (SHFE) for January delivery climbed 20 yuan to finish at 14,315 yuan ($1,963) per metric ton.

“Recent signs of recovering sales by Japanese automakers lent support to market sentiment,” said Satoru Yoshida, a commodity analyst with Rakuten Securities. “Also, the yen’s continued slide boosted the prices of most Japanese commodity futures, including rubber,” Yoshida said, adding that OSE prices may advance further as long as the yen remains in a bearish trend.

Nissan Motor and Honda Motor last week said they expect higher profit this year than previously forecast, a sign of how Japan’s automakers are seeing some benefit from a weak yen currency and a recovery in sales.

The US dollar climbed to its highest levels in over a year against the yen on Monday, supported by a scaling back of expectations for US Federal Reserve interest rate cuts next year. A weaker yen makes yen-denominated assets more affordable when purchased in other currencies. Investors were also watching closely for any signs that could affect the relationship between Beijing and Washington.

US President Joe Biden this week will host a summit of Asia-Pacific Economic Cooperation (APEC) country leaders in San Francisco, which will feature a planned meeting between Biden and his Chinese counterpart Xi Jinping.