Rubber Price Drags As Political Uncertainty in the US

Rubber prices fell more than 1 percent in late trading today, Friday (16/3/2018), due to weighing the strengthening of the yen currency that has the potential to reduce demand.

The price of rubber for delivery in August 2018 at Tokyo Commodity Exchange (Tocom), closed down 1.74% or 3.40 points at 191.80 yen per kilogram (kg).

Previously, rubber prices opened in the green zone with a slight rise of 0.05% or 0.1 point at 195.30 yen per kg, after trading on Thursday (15/3) ended up 0.26% or 0.5 points at position 195.2o.

According to analysts at Sunward Trading broker Hideshi Matsunaga, the stronger yen against the US dollar and rising rubber stocks in China have put pressure on commodity prices.

China's rubber reserves monitored by the Shanghai Futures Exchange rose 0.2% or 437.896 tons last week. The Japan Rubber Trading Association recorded that rubber inventories increased 2.2% to 15,206 metric tons.

Meanwhile, the yen appreciated 0.55% or 0.58 points to 105.76 per dollar at 14.42 pm, after finishing 0.01 per cent thin depreciation at 106.34 in trading on Thursday (15/3). ).

The performance of the yen as a safe haven asset was prompted by US President Donald Trump's plan to get rid of his national security adviser, H.R. McMaster.

The latest news sparked widespread concern about the future of the foreign policy of the Trump Administration.

Reports that Special Advisor Robert Mueller issued a summons to the Trump Organization raised concerns about political uncertainty in the United States.

As is known, the strengthening of the Japanese yen exchange rate against the US dollar makes the price of commodities traded in this currency to be relatively more expensive for overseas buyers. As a result, demand for these commodities has the potential to decline.

"The current investor focus is on the rubber exporter's decision whether to extend the export restriction policy before it expires at the end of March," added Matsunaga, as quoted by Bloomberg.

The three largest rubber exporting countries, Thailand, Indonesia and Malaysia will meet after the export restriction policy ends on March 21 to decide whether the policy will continue.

Earlier, Thailand Rubber Authority Governor Titus Suksaard said the rubber export restrictions had gone ahead as planned.