* C.bank widens rouble floating corridor, mkt sources say
* Seen as step toward free float and inflation-targeting
* Bank expected to hold briefing later on Wednesday
(Adds analyst quotes, background)
By Andrey Ostroukh
MOSCOW, Oct 13 (Reuters) - Russia's central bank has widened the rouble's floating exchange rate corridor, market sources told Reuters on Wednesday, a cautious step towards a free floating currency and focussing the bank squarely on inflation.
A representative of a major Russian lender, who asked not to
be named, said the central bank had widened the floating
corridor of the euro-dollar basket by 50 kopecks in each
direction
Two dealers at major banks in Moscow confirmed this. Central bank officials were not immediately available to comment but were due to hold a briefing later on Wednesday.
The change pointed to by the sources suggests new boundaries for the floating corridor at 32.90 and 36.90 roubles against the basket, although there is debate in the market about whether the previous boundaries were at 33.40-36.40 or 33.30-36.30 roubles.
Russia has gradually allowed more flexibility for the rouble, which is largely driven by oil and gas prices, as it seeks to shift the key focus of its policy to targeting inflation rather than the exchange rate in coming years.
Prime Minister Vladimir Putin's government was concerned by the rouble's sharp depreciation after the financial crisis in 2008, but has stayed largely silent on the currency since, which is broadly stable this year after losses in September.
That leaves Russia with less of the headaches around an overvalued afflicting China, Japan and others. Putin has set the industrial revival of Russia as a priority and some officials say keeping a lid on rouble volatility and the option of combatting broader appreciation suits those goals.
The central bank, however, has long argued that a free float would be best.
"It is a medical fact that the central bank has been planning this (band widening) for a long time," said Alexander Morozov, chief economist for Russia at HSBC.
ELASTIC
In the draft document on monetary policy published in September, the central bank said "the elasticity and the width of the ... corridor will gradually change in the course of ... increasing the flexibility of the exchange rate". [ID:nLDE68J0KZ]
Maxim Oreshkin, senior strategist for Russia and CIS at Credit Agricole, said the possibility of widening the corridor had been discussed at a conference of economists and central bank officials at the MICEX exchange on Monday.
"A one-rouble widening of the floating corridor may be a next step towards a free-float regime," he said.
During the height of the crisis, officials resisted the pressure to introduce capital controls, leaving Russia as the only BRIC economy without any such limits.
In July 2009 it introduced a 3-rouble-wide floating corridor which it shifts by 5 kopecks after $700 million of so-called "border" interventions at each boundary, according to the publicised rules of its intervention mechanism.
The widening of the floating corridor will reduce the need for "border" interventions, said Morozov at HSBC.
The floating corridor lies within a broader fixed band of 26-41 roubles per basket which was introduced in late Jan. 2009, crowning a so-called "managed" rouble devaluation prompted by the financial and economic crisis in autumn 2008.
The widening of the band came as the rouble set 8-1/2 month lows versus the euro on Wednesday, as imports surged, companies looked abroad for growth and investors fretted about the health of the economy after this year's severe drought. [ID:nLDE69C0CV]
The currency showed no immediate reaction to the news, and dealers said the central bank was still present in the market with its usual small-scale dollar sales once the rouble weakened beyond 35.30/40 per basket. By 1218 GMT it was trading at 35.46.
The weakness in the rouble contrasts with the problems faced by many other emerging and developed countries at the moment, which are struggling to restrain currency appreciation.
Some officials, such as deputy economy minister Andrey Klepach, have said Russia is not yet ready for a free float. The central bank has stressed that it will not abandon the possibility of interventions altogether and will reserve the right to enter the market if it deems necessary.
(Editing by Toni Vorobyova and Patrick Graham)