SINGAPORE: Japanese rubber futures fell on Friday to their lowest in nearly two years, as the yen firmed on hopes that the Bank of Japan (BOJ) could tweak its ultra-loose monetary policy later in the day.

The Osaka Exchange (OSE) rubber contract for January delivery was down 2.4 yen, or 1.2%, at 198.0 yen ($1.42) per kg, as of 0221 GMT.

The benchmark contract has sunk 1.8% for the week thus far, and tumbled 6.6% since its last weekly gain on June 9.

The rubber contract on the Shanghai futures exchange (SHFE) for September delivery was down 20 yuan, or 0.2%, at 12,175 yuan ($1,697.98) per metric ton.

Japan’s benchmark Nikkei average opened down 1.36%.

Core inflation in Japan’s capital slowed in July but remained well above the central bank’s 2% target, data showed, keeping pressure on policymakers to dial back ultra-loose monetary policy.

The yen strengthened as much as 0.55% to 138.72 per dollar before losing steam to trade at 139.37. The currency is up about 2% against the dollar this week.

A stronger yen makes assets dominated by the currency less affordable for overseas buyers.

Oil prices fell in early Asian trade as demand concerns weighed against strong economic data.

Lower oil prices incentivise manufacturers to shift to rival synthetic rubber, derived from oil, hindering the natural rubber market.

Still, supply concerns helped limit losses in Japanese rubber futures.