By Aya Takada Feb. 19 (Bloomberg) -- Rubber advanced to a four-week high as the yen dropped against the dollar after the Federal Reserve Board raised the discount rate and Thai exporters boosted prices on improving demand from buyers in Asia. Futures in Tokyo gained as much as 1.5 percent to the highest level since Jan. 22. The price is headed for a second weekly gain. The Fed raised the discount rate charged to banks for direct loans by a quarter point to 0.75 percent, the first increase in more than three years. Japan’s currency reached a one-month low against the dollar, boosting the appeal of yen- based contracts. Rubber also gained as shippers in Thailand, the world’s largest producer, raised export prices after purchases by an Asian company, said Kazuhiko Saito, chief analyst at Tokyo-based broker Fujitomi Co. “Physical rubber prices gained on good demand and as supply is set to decrease seasonally,” Saito said by phone today. “Prices may increase further as Chinese buyers will return to the market next week after holidays.” Rubber for July delivery, the most-active contract, gained as much as 4.4 yen to 300.2 yen per kilogram ($3,239 a metric ton) before trading at 297.5 yen on the Tokyo Commodity Exchange at 11:56 a.m. local time. In the cash market, Thai shippers offered so-called RSS-3 grade rubber for April shipment at about $3.30 a kilogram today from $3.18 yesterday, Saito said. Rubber trees shed leaves and latex output slows during wintering, the low-production season that normally begins in Thailand’s main growing areas in February. The rubber market in Shanghai is closed this week for the Lunar New Year holidays. Gains in futures were limited as crude oil declined, reducing the cost of making rival synthetic rubber, Saito said. Oil dropped for the first time in four days as the dollar’s rally weakened the appeal of the commodity as an alternative investment. Crude oil for March delivery dropped as much as 1.4 percent to $77.95 a barrel in electronic trading on the New York Mercantile Exchange before trading at $78.07. To contact the reporters on this story: Aya Takada in Tokyo at atakada2@bloomberg.net;

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