Tokyo rubber futures fell about 2 percent on Friday, reversing the previous day's rally to a one-month high as a rise in the yen versus the dollar encouraged investors to lock in profits. The most-active rubber contract on the Tokyo Commodity Exchange for January delivery fell 4.5 yen a kg, or 1.7 percent, to 257.1 yen.
The dollar hit a three-month low versus the yen on Friday as a sell-off in credit and stock markets forced investors to cut back on risky carry trades. The dollar traded at around 118.90 yen as Japanese investors hurried to buy foreign assets. The dollar had fallen to 118.02 yen on electronic trading platform EBS in Asian trade.
On Thursday the December rubber contract, then a benchmark, rose as high as 263.1 yen, the highest intrude since late June. The January contract was listed on Thursday and rose as high as 263.5 yen after at 257.6 yen. The TOCOM market had been lifted partly by news on Thursday that some rubber shipments from Indonesia were facing delays because of limited availability following erratic weather hitting tapping activities.
Indonesia's rubber output this year is expected to increase far less than 5 percent from 2006, Daido Huns Bestiary, chairman of the Rubber Association of Indonesia, said on Thursday. The Indonesian group of producers had previously forecast that output would grow 5 percent to 2.8 million tonnes this year. Indonesia is the world's second-biggest rubber producer after Thailand.