TOKYO: Benchmark Tokyo rubber futures inched higher on Wednesday, recovering from a fresh four-month low hit earlier in the session, as a decline in the yen prompted investors to unwind short positions, dealers said.
The Tokyo Commodity Exchange rubber contract for November delivery finished 0.5 yen, or 0.3 percent, higher at 149.9 yen ($1.41) per kg.
TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, in early trade fell to 146.7 yen, the lowest since Feb. 15, on weaker oil prices.
Crude futures fell on Wednesday as mounting concerns about Britain's possible exit from the European Union and a surprise build in U.S. inventories left investors ignoring an IEA declaration that oil markets are now in balance.
"But the yen's decline in later trade helped spark some buying," said Jiong Gu, an analyst at Yutaka Shoji Co.
The U.S. dollar has been dragged lower against the yen, as prospects of the Fed raising rates this month have been dashed by soft U.S. data, but it edged up 0.2 percent to 106.260 yen on Wednesday, having bounced from an overnight low of 105.630 thanks to Tuesday's upbeat May U.S. retail sales data.
"TOCOM may remain in a narrow range between 147 and 153 yen for a while as there is uncertainty over the U.S. and Japanese monetary policies as well as Brexit," Gu added.
The U.S. Federal Reserve is expected to keep interest rates unchanged on Wednesday and signal if it still plans to raise rates twice in 2016 amid concerns about a U.S. hiring slowdown and Brexit. The central bank is due to issue its latest policy statement and updated economic projections following a two-day meeting at 1800 GMT.
Bank of Japan started its two-day monetary policy meeting on Wednesday. A renewed spike in the yen is adding to headaches for policymakers meeting for a rate review, but many of them still appear to prefer holding off on expanding stimulus despite signs of weakening inflation.
The most-active rubber contract on the Shanghai futures exchange for September delivery fell 105 yuan to finish at 10,410 yuan ($1,579.64) per tonne.
The front-month rubber contract on Singapore's SICOM exchange for July delivery last traded at 123.1 U.S. cents per kg, up 0.6 cent.
