SINGAPORE: Japanese rubber futures dropped more than 1% on Tuesday as traders locked in profit after a recent rally, although the contract still hovered near seven-year highs on supply tightness and a weaker yen.

The Osaka Exchange (OSE) rubber contract for July delivery was down 3.5 yen, or 1.17%, at 295 yen ($1.96) per kg, as of 0200 GMT.

It traded as high as 304.4 yen ($2.03) earlier in the session, the highest intraday price since February 2017.

The rubber contract on the Shanghai futures exchange (SHFE) for May delivery was up 20 yuan, or 0.15%, at 13,545 yuan ($1,881.90) per metric ton.

The Japanese yen weakened 0.1% to 150.26 against the dollar. The yen was pinned near a three-month low against the dollar on Tuesday as sticky U.S. inflation bolstered the case for higher-for-longer interest rates, contrasting with a recession in Japan and market doubts about a near-term exit from its easy policy.

A weaker currency makes yen-denominated assets more affordable to overseas buyers.

Japan’s benchmark Nikkei average opened 0.1% higher.

Thailand’s meteorological agency warned that severe weather from Feb. 23-25 in northeastern, eastern, and central Thailand could lead to crop damage.

Asian shares were pinned below 1-1/2-month highs on Tuesday as even a larger-than-expected interest rate cut in China failed to excite investors jaded at the lack of bigger stimulus measures.