TOCOM slides on firmer yen in thin holiday trade

Benchmark Tokyo rubber futures slid in thin trade on Monday, touching a nearly 1-week low, weighed down by a firmer yen against the U.S. dollar and a plunge in Tokyo equities amid growing worries over a tumble in Turkey’s lira.

World markets wobbled on Monday as Turkey’s worsening currency crisis persuaded investors to dump equities and emerging markets investments and flee to safer assets such as government bonds, the dollar and the yen.

The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished 0.6 yen lower at 171.7 yen ($1.56) per kg, after hitting the lowest since Aug. 7 at 170.1 yen earlier in the session.

“Trade was light as many end-users and dealers are away for summer holiday this week,” said Jiong Gu, an analyst at Yutaka Shoji Co, referring to Japan’s ‘bon’ holidays when families get together to remember and honor their ancestors.

“The yen’s gain as a safe-heaven asset added to pressure,” he said.

The yen surged half a percent against the dollar to 110.42 after earlier hitting a six-week high of 110.11.

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

Further adding pressure, Japan’s Nikkei tumbled 2 percent to a five-week low on Monday as a sell-off in emerging market currencies spooked stock investors, with the yen’s appreciation hurting sentiment and dragging down the broader market.

The most-active rubber contract on the Shanghai futures exchange for January delivery fell 65 yuan to finish at 12,475 yuan ($1,813) per tonne.

The front-month rubber contract on Singapore’s SICOM exchange for September delivery last traded at 134.2 U.S. cents per kg, up 0.1 cent.

The benchmark TOCOM futures, which sets the tone for rubber prices in Southeast Asia, is expected to stay between 170-175 yen this week, with the focus remaining on currency markets, reflecting developments in the Turkish crisis and the Sino-U.S. trade war, Gu said.

($1 = 6.8815 Chinese yuan renminbi)

($1 = 110.3200 yen) (Reporting by Yuka Obayashi; Editing by Mark Potter)