* Rouble weakest vs dollar since late July
* Oil below $80 weighs on currency
* Shrugs off inflation for now, may benefit in medium-term
(Adds data, quotes, updates with closing prices)
By Toni Vorobyova
MOSCOW, Aug 11 (Reuters) - The Russian rouble fell to its lowest in over two weeks against the dollar on Wednesday, shrugging off signs of a pick up in domestic inflation and taking its cues instead from the retreat in global oil prices.
The rouble eased to 30.30 per dollar, its weakest since late
July, before closing at 30.29
"Equity markets are correcting and oil is going down, and all that is pressuring the market," said Vladimir Demishev, trader at Troika Dialog, adding that for now he saw no impact on market direction from the heatwave or the drought.
Weekly inflation doubled to 0.2 percent as Russians stocked up on long-life goods in expectation that a drought -- caused by the worst heatwave on record -- will push up food prices. [ID:nMSC000035]
Many analysts -- including Goldman Sachs [ID:nLDE67A0XX], Citi [ID:nLDE67A0XX] and Russia's VTB Capital -- expect that inflationary pressures will prompt the central bank to allow greater currency appreciation in the medium term.
But for now, investors are shrugging off the impact of the drought, with the rouble firmly linked to its long-time driver, oil prices, which dipped below $80 [O/R].
The correlation between the rouble/dollar rate and oil -- a key export for Russia -- has risen to its highest levels since late May this month, at around 80 percent.
"We effectively have barrel-trading - we continue to depend on the oil price," said Viktor Anisimov, dealer at Alba Alliance. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For graph of correlation between the rouble and oil prices see http://graphics.thomsonreuters.com/gfx1/SBrb_20100908162747.jpg ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
The heat and the toxic smoke from forest fires, which have enveloped Moscow in recent weeks, have dampened activity on stock and bond markets as traders and investors flee the capital.
But on the currency market -- where clients include
corporates having to meet real obligations in addition to
speculators, daily volumes have remained around the normal range
of $2.5-3.5 billion a day in dollar/rouble on the MICEX exchange
-- and topped $4 billion on Wednesday.
The Russian currency fell 8 kopecks against the dollar-euro
basket the central bank uses for guiding the rouble's nominal
exchange rate, to close at 34.37
Another down side for the rouble were worries about the health of the global economy, and thus the prospects for demand for Russian exports after the U.S. Federal Reserve on Tuesday moved to counter a weakening U.S. recovery by pledging to buy more government debt. [ID:nN09275781]
Against a broadly weaker euro, the rouble edged up to 39.36