Jan. 29 (Bloomberg) -- Rubber rallied from the lowest level in 16 months as Japan’s currency weakened against the dollar before the U.S. Federal Reserve ends a policy meeting, boosting the appeal of yen-denominated futures.
The contract for delivery in July, the most-active by volume, closed at 232.5 yen a kilogram ($2,250 a metric ton) on the Tokyo Commodity Exchange. Futures slipped into a bear market yesterday, settling at 226.7 yen, the lowest level since September 2012.
The yen fell to 103.44 per dollar, retreating from a one- month high of 101.77 reached Jan. 27. The Fed concludes its two- day meeting today, with economists polled by Bloomberg on Jan. 10 projecting a second $10 billion cut to a bond buying program that has devalued the greenback.
“Expectations for further reduction in the Fed’s bond- buying are weakening the yen and supporting futures,” said Kazuhiko Saito, an analyst at Fujitomi Co., a broker in Tokyo.
Futures fell for an eighth session yesterday. That took losses since the closing high on Sept. 9 to 21 percent, meeting the common definition of a bear market, as slowing economic growth and rising stockpiles in China signaled weakening demand from the largest consumer of the commodity used in tires.
Rubber for May delivery on the Shanghai Futures Exchange rose 0.2 percent to end at 15,635 yuan ($2,583) a ton. The most- active contract closed yesterday at the lowest since July 2009.
Rubber free-on-board at Songkhla, Thailand, was unchanged at 72.25 baht ($2.20) a kilogram today, according to the Rubber Research Institute of Thailand.
--With assistance from Supunnabul Suwannakij in Bangkok. Editors: Ovais Subhani, Jake Lloyd-Smith