Although a drought has hit Russia’s agriculture sector and diminished growth somewhat, the country’s exchange traded funds (ETFs) aren’t being brought down.

The continued heat wave and consequent drought has diminished domestic activity. The economy shrank a seasonally adjusted 0.4% in August month-over-month. The economy expanded 3.7% in the year through August.

Russia’s Central Bank may hold rates at its record low of 7.75% for a few more months, adding that “inflationary risks, defined by monetary conditions, remain at an acceptable level,” writes Toni Vorobyova for ForexYard. The Central Bank may also raise banks’ reserve requirements instead of rates to reduce the money supply.

Central Bank chairman Sergei Ignatyev already stated that the 2010 inflation could hit 8%, or a full percent above estimates made at the beginning of the month. [Russia’s ETFs And Economy Remain In Limbo.]