MOSCOW (MRC) -- The rouble weakened to a one-week low against the dollar at one stage losing almost 1%, hit by retreating oil prices after OPEC+ overcame internal divisions and agreed to boost output, a move that also sent Russian stocks tumbling, reported Reuters.
By 1529 GMT, the rouble was 0.8% weaker against the dollar at 74.63, a one-week low, and had lost 0.8% to trade at 88.16 versus the euro.
Brent crude oil, a global benchmark for Russia's main export, was down 5.4% at USD69.60 a barrel.
Oil prices were lower after OPEC+ ministers agreed on Sunday to increase oil supply from August to cool prices which have climbed to 2-1/2 year highs as the global economy recovers from the coronavirus pandemic.
"Despite the local drawdown, we view the increase in Russia's oil production quota as positive for the rouble in the medium term," said Promsvyazbank analysts in a note.
The fall in oil prices was adding to Russian headwinds on Monday, said Alfa Bank in a note, with risk-off sentiment over the spread of the Delta variant of the coronavirus offsetting strong earnings and resurgent consumer demand.
The rouble does have the support of a month-end tax period which usually prompts export-focused companies to convert revenues in foreign currencies into roubles and expectations of a rate hike by the central bank later this week. Governor Elvira Nabiullina said last month the board may consider raising rates from 5.5% by 25-100 basis points at its July 23 meeting to rein in inflation.
A Reuters poll on Monday showed market expectations leaning towards a 100 basis-point interest rate hike on Friday.
Russian stock indexes were at their weakest since late May. The dollar-denominated RTS index was down 3% to 1,555.5 points, its lowest since May 21. The rouble-based MOEX Russian index was 2.3% lower at 3,682.8 points, its weakest since May 25.
As MRC informed earlier, Russia's offline oil refining capacity is expected to decline by 19.5% month-on-month to 2.866 million tonnes in July, according to Refinitiv Eikon data and Reuters calculations. The offline capacity has been revised up in June, by 12.6% from the previous plan to 3.560 million tonnes.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.
MRC