Rubber dropped to the lowest level in more than a month as the Japanese currency climbed against the dollar, cutting the appeal of yen-denominated futures, amid concern the U.S. government is headed for a partial shutdown.
The contract for March delivery on the Tokyo Commodity Exchange lost as much as 1.7 percent to 265.6 yen a kilogram ($2,717 a metric ton), the lowest level since Aug. 23, and was at 267 yen at 10:23 a.m. The drop pared gains for a most-active contract to 13 percent this quarter, the best rally since the three months through Dec. 31.
The yen rose to 97.53 per dollar, the highest level since Aug. 29, as a political stalemate over the U.S. budget prompted investors to buy the Japanese currency as a haven. The House of Representatives voted 231-192 yesterday to stop many of the Affordable Care Act’s central provisions for one year, tying it to an extension of U.S. government funding through Dec. 15. Should the Senate reject the bill today the government could be shut down from tomorrow.
“The shutdown could weaken consumption and slow down the U.S. recovery, which are negative for commodities,” said Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo. “A stronger yen is another blow to futures in Tokyo.”
Rubber also declined after data showed today that Japan’s industrial production fell 0.7 percent in August, raising speculation demand may weaken for the commodity used in tires.
Rubber for January delivery on the Shanghai Futures Exchange rose 0.2 percent to 20,300 yuan($3,311) a ton. Chinese markets will be closed Oct. 1-7.
Thai rubber free-on-board declined for a third day on Sept. 27, dropping 0.6 percent to 81.05 baht ($2.58) a kilogram, according to the Rubber Research Institute of Thailand.