Rubber Tops 300 Yen for First Time in Four Months as BOJ Prepares to Act

Rubber climbed for a third day, topping 300 yen per kilogram for the first time since April, as Japan’s central bank prepares to act to stem the yen’s rally and support the nation’s export-led economic recovery.

Futures in Tokyo gained as much as 1 percent to 302 yen a kilogram ($1,166 a metric ton), the highest level since April 30, extending last week’s 2.7 percent increase.

The Bank of Japan is holding an emergency board meeting today as the yen’s surge to a 15-year high forces policy makers to find ways to support the nation’s slowing expansion. The move follows signs the U.S. is also open to further monetary stimulus, with Federal Reserve Chairman Ben S. Bernanke saying three days ago that he has the tools to prevent another recession.

“U.S. and Japanese authorities are preparing to take additional measures to support economic growth, which are positive for raw-material demand,” Takaki Shigemoto, an analyst at JSC Corp. in Tokyo, said today by phone.

The February-delivery contract gained 0.7 percent to 301 yen at 11:02 a.m. on the Tokyo Commodity Exchange. The price has increased 9 percent this year.

The Japanese currency slipped against the dollar amid speculation the Bank of Japan will step up injections of liquidity to sustain a weakening recovery, boosting the appeal of yen-denominated contracts.

The yen dropped to 85.77 per dollar as of 10:30 a.m. in Tokyo from 85.22 yen in New York. It surged to 83.60 per dollar on Aug. 24, the strongest level since June 1995.

The central bank will probably expand its 20 trillion yen bank-loan program and extend the term for the credit from three months, said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. Governor Masaaki Shirakawa will speak to reporters about the central bank’s decision at 2:30 p.m. in Tokyo today.

January-delivery rubber on the Shanghai Futures Exchange gained 1.3 percent to 25,960 yuan ($3,816) a ton at 10:07 a.m. local time. China’s inventories shrank for the first week in five, dropping by 32 tons to 24,701 tons, the exchange said on Aug. 27, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin.

(bloomberg.com)