Benchmark Tokyo rubber futures plunged to 8-month lows on Friday, marking their fifth straight weekly loss, as selling intensified after the yen extended gains against the US dollar and amid concerns over rising inventories. The Tokyo Commodity Exchange (TOCOM) rubber contract for July delivery finished 4.5 yen, or 2.4 percent, lower at 181.5 yen ($1.72) per kg, after diving below a 180 yen mark of 179.2 yen, the lowest since June 7.
For the week, it lost 4.1 percent. Chinese financial markets are closed for a week from Thursday for the Lunar New Year holiday. Most of Southeast Asian financial markets are also closed on Friday for the holiday.
The dollar on Friday fell to as low as 105.545 yen, its weakest since November 2016. The US currency has been weighed down by a variety of factors this year, including concerns that Washington might pursue a weak dollar strategy and the perceived erosion of its yield advantage as other countries start to scale back easy monetary policy.
"With little fresh factors, as China and many other Asian financial markets closed for a holiday, the yen's surge prompted a flurry of selling in the TOCOM," said Satoru Yoshida, a commodity analyst with Rakuten Securities. A stronger yen makes yen-denominated assets less affordable when purchased in other currencies.
"If the yen keeps rising next week, rubber prices are expected to remain under pressure as market fundamental is also weak given increasing inventories in Japan and China," Yoshida added.
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