Currency volatility casts gloom over Asian rubber market
Currency volatility casts gloom over Asian rubber market
SINGAPORE (Reuters): Political upheaval in Japan and regional
currency volatility would cast a gloomy cloud over Southeast
Asia's lackluster rubber market this week, regional traders said
yesterday.
"Japan's political problems and falling regional currencies
remain the focus of the market and will keep rubber prices under
downward pressure," one Singapore-based trader said.
The three-way race for the prime minister's office in Tokyo
started after Ryutaro Hashimoto's resignation last week and will
last until Friday, with many in the market backing former chief
cabinet secretary Seiroku Kajiyama.
"I think Kajiyama could bring some confidence back to the
Asian markets," another Singapore trader said.
A national holiday in Japan got the Asian rubber market off to
a quiet start, following the lead of the currency markets.
The Japanese yen was trading at about 139 to the U.S. dollar
at 0845 GMT, with most regional currencies losing ground to the
greenback, though mainly in dribs and drabs.
Currency volatility would be the main factor dampening
Malaysian rubber prices, dealers said.
Last week, demand from Taiwan and South Korea was offset by
the ringgit's strength against the U.S. dollar and in the absence
of fresh factors, currencies would continue to exert influence on
traders.
"Prices could ease back as the ringgit has been holding
steady," a local trader said. "But it will be rangebound."
At the close of last week, the Malaysian Rubber Board quoted
August RSS1 buyer at 292.50 Malaysian cents a kg after hitting a
high of 295, compared with 289.50 a week earlier.
August SMR20 buyer closed at 254 cents a kg, down three cents
for the week.
Indonesian traders meanwhile were keeping a close watch on the
rupiah, which would keep them sidelined.
"The situation is not expected to change much this week. The
prices will remain at about 27-28 U.S. cents/lb fob Palembang
because the traders and buyers are still looking at the political
and economic situation which has yet to stabilize," said one
Indonesian trader.
Negative influence on rubber prices was also seen from
industrial disputes in the U.S. and South Korea.
Hyundai Motor Co has begun a program of lay-offs, sending
notices to some 2,700 workers, while General Motors Corp faces a
strike at a small-car plant which follows stoppages earlier this
year at two other GM plants.
"These strikes unsettle the market and remove any demand at
all for fill-in rubber volume which was weak anyway," a Singapore
trader said.