Jan. 28 (Bloomberg) -- Rubber dropped from the highest level in almost a week as investors sold the commodity after the yen rallied against the dollar from a 2 ½ year low, reducing the attractiveness of contracts denominated in the Japanese currency.
The contract for delivery in June lost 0.4 percent to close at 310.3 yen a kilogram ($3,417 a metric ton) on the Tokyo Commodity Exchange after climbing earlier to 313.8 yen, the highest price since Jan. 22. Futures for July delivery, listed on the bourse today, settled at 313.7 yen.
The yen earlier reached 91.26 to a dollar, the weakest level since June 2010, before data forecast to show a pickup in U.S. durable goods orders, adding to signs of a recovery in the world’s biggest economy. It last traded at 90.67 to a dollar as traders bet that recent losses were overdone.
“Investors locked in profits as the yen broke through 90 per dollar, the level that ruling party politicians had previously described as appropriate,” said Takaki Shigemoto, an analyst at research company JSC Corp. Excessive decline in the yen may be negative for Japan’s economy as costs to import fuels and foods will increase, curbing consumption, he said.
Rubber for May delivery gained 0.1 percent to close at 25,595 yuan ($4,112) a ton on the Shanghai Futures Exchange. Thai rubber free-on-board dropped 0.2 percent to 97.60 baht ($3.26) a kilogram today, according to the Rubber Research Institute of Thailand.
Investors are concerned over declining orders from China ahead of New Year holidays, the institute said on its website.
--With assistance from Supunnabul Suwannakij in Bangkok and Diep Ngoc Pham in Hanoi. Editors: Ovais Subhani, Thomas Kutty Abraham