TOCOM plunges after yen's jump as BOJ stimulus disappoints

Benchmark Tokyo rubber futures plunged on Friday, as the yen's jump, after the Bank of Japan's monetary easing disappointed investors and slumping oil prices prompted a flurry of selling, leading to a third monthly decline.

The Bank of Japan (BOJ) announced a modest increase in purchases of exchange-traded funds, but maintained its base money target at 80 trillion yen (US$775 billion) as well as keeping to the pace of purchases for other assets, including Japanese government bonds.

"The yen's rally and weaker oil market dampened sentiment," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

The yen soared against the dollar on Friday, after the BOJ's moves disappointed investors who had been hoping for at least a hint of more radical stimulus.

A stronger yen makes yen-denominated assets less affordable, when purchased in other currencies.

Oil prices fell to their lowest levels since April on Friday, with on Brent track for its biggest monthly loss since December 2015, pressured by slowing economic growth that threatened to increase a supply overhang of crude and refined products.

The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished 4.6 yen or 2.9%, lower at 153.5 yen (US$1.48) per kg.

The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, fell 5.7% for the week, marking its first weekly drop in three weeks, while it lost 1.6% for July.

"The TOCOM is expected to face more selling next week, especially if the yen moves even higher," Kikukawa said.

The most-active rubber contract on the Shanghai futures exchange for September delivery also tumbled 365 yuan to finish at 10,845 yuan (US$1,631) per tonne.

The front-month rubber contract on Singapore's SICOM exchange for August delivery last traded at 131 U.S. cents per kg, down 1.2 cents.