(Adds interventions, c.bank meeting, trade volumes, close)
By Gleb Bryanski
MOSCOW, Jan 20 (Reuters) - The rouble unexpectedly recovered from Russia's latest attempt to let the currency weaken further on Tuesday, giving the central bank a first glimpse of hope that its gradual devaluation policy has worked.
Russia has spent over a quarter of its forex reserves, the world's third largest, supporting the rouble in recent months and even the gradual devaluation policy launched last November has until today failed to ease the pressure on the currency.
This policy, coupled with growing expectations of a further devaluation, has killed the domestic debt market and stalled the government's anti-crisis measures, turning foreign currency bets into the market's most profitable transaction.
The central bank said it had widened the rouble's trading band for a seventh time this year on Tuesday with the currency duly weakening by 40 kopecks to 38.20 against the dollar/euro basket in the early trading session.
However, the rouble closed at 37.32 against the dollar/euro basket -- strengthening beyond the 37.80 mark seen as the central bank's support level on Monday. Dealers said the central bank did not intervene in the market on Tuesday.
The recovery provided some substance to official comments that the devaluation policy may be nearing its end.
"We are much closer to a kind of equilibrium (exchange rate) level than ... a month ago," Kremlin economic adviser Arkady Dvorkovich told The Financial Times in an interview.
"The central bank will conduct a policy that (will) lead to this equilibrium level, but it's not far away," he added.
NEW EQUILIBRIUM
Rouble non-deliverable forwards, a barometer of market expectations, cast doubt on Dvorkovich's remarks, however. Bets on currency depreciation remain popular, with rouble/dollar forwards traded on the RTS exchange hitting a daily record of nearly 16,000 deals on Tuesday.
But some analysts take a more optimistic view. "At the current pace of adjustment, the rouble in any case will settle at its new equilibrium value relatively soon," said Ivan Tchakarov from Nomura International.
The rouble's move also coincided with the resumption of Russian gas supplies to Europe via Ukraine after Moscow and Kiev ended a contract dispute but analysts did not see a link there.
Russia's RTS stock index hit a new 5-year low.
Russian officials maintain they chose the salami slicing rouble policy to enable households and most businesses to shift their cash into foreign currency in an orderly way. They had to resist heavy pressure from a one-off depreciation lobby.
The new government forecast based on the average price of oil at $41 per barrel implies the rouble should average 41.4 to the basket, made of 0.55 dollars and 0.45 euros. That assumes more devaluation seen by some analysts as harmful for the economy.
LIQUIDITY SHORTAGE
Dealers told Reuters they could not yet establish the central bank's new support level and were puzzled that the rouble had firmed despite a fall in the price of Urals crude, Russia's main export commodity, below $40 a barrel.
The central bank also called a meeting of chief treasurers of some major commercial banks on Tuesday to discuss exchange rate policy. Dealers said talk of the meeting helped the rouble.
"The central bank gave us to understand that from the point of view of purchasing power parity we are near the peak of the devaluation," said a source who attended the meeting.
In a further boost for the currency, Finance Minister Alexei Kudrin forecast during a visit to Beijing it could strengthen versus the dollar in the medium term. He said Russia will take measures to bring foreign capital back into the country once the exchange rate stabilises, without giving details. A weaker rouble was helping exporters, he added.
A shortage of rouble liquidity ahead of value added tax payments has also helped the Russian currency, analysts said. Corporate tax payments in Russia suck huge amounts of roubles from the commercial banking sector into the Treasury.
The central bank lifted the daily limit on currency swap operations -- a tool to obtain rouble liquidity against foreign currency, widely used by banks to bet against the rouble.
The central bank also allocated a daily record of 535 billion roubles through its repo auction. With such strong demand for roubles, analysts forecast more two-way volatility for the exchange rate as the rouble seeks an equilibrium.
"Going forward we are likely to see higher daily volatility in the rouble's exchange rate against the basket, but the underlying trend is still for a weaker rouble," said Lars Rasmussen from Danske Bank. (Additional reporting by Yelena Fabrichnaya in Moscow and Tom Miles in Beijing; editing by Stephen Nisbet)