UPDATE 1-Russian rouble hits fresh peak despite cbank warning

By Andrei Ostroukh and Toni Vorobyova MOSCOW, Nov 11 (Reuters) - Russia's central bank allowed the rouble to hit an 11-month peak against the dollar on Wednesday, just a day after warning market participants against one-way bets on continued appreciation of the currency. The rouble has rallied 11 percent versus the dollar since the start of September, propelled by one-year highs in oil prices, returning investor appetite for emerging markets and signs Russia is recovering from its first recession in a decade. The central bank has regularly intervened to slow down the rally. But -- as part of a policy to gradually move towards a free-floating exchange rate -- it has not halted the rouble's progress altogether. The rouble strengthened as far as 35.12 versus the central bank's euro-dollar basket on Wednesday, moving beyond the 35.15 mark seen as the previous intervention level. "Looks like the central bank is at 35.10. I think (they bought) around $700 million or a bit more," said Darya Dushutina, dealer at Nomos Bank. Against the dollar, the rouble firmed to 28.63, its strongest since last December. The rouble's gains come a day after the central bank cautioned financial markets against one-way bets on the rouble's strength, suggesting investors were paying little heed to the warning. VTB Capital's analysts described the central bank's comments as "verbal intervention against the rouble carry trade". Russia has cut rates by 350 basis points since April, but at 9.50 the benchmark refinancing rate still offers very attractive yield against rates of 1 percent or less in the major Western economies. NO LUCK IN CONVINCING INVESTORS Senior central bank official Sergei Shvetsov said on Tuesday further rate cuts and expected large injections of liquidity from budget coffers towards the end of the year could change the rouble's trajectory. But investors were unconvinced, with VTB Capital forecasting the extra cash from the budget would "spill over into asset price inflation rather than lead to rouble depreciation if oil prices stay high". Russia's Urals traded at $76.5 a barrel on Wednesday, off recent one-year peaks but still nearly $20 stronger than the price factored into this year's budget. Non-deliverable forwards, a barometer of market sentiment, put the rouble at 30.44 per dollar in 12 months, implying only a small weakening from current levels and showing that investors are at their most optimistic on the currency in nearly a year . "Good luck to them (in trying to turn around the rouble). The inflows are overwhelming and it's not just hot money," said Elina Ribakova, analyst at Citi. "At these levels investor sentiment is very positive and at this level of nominal interest rate differential they are bound to remain very positive." (Editing by Patrick Graham) Keywords: RUSSIA ROUBLE/ ([e-mail]; Tel: [phone], Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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