Russia rouble closes at 10-day low on c.bank remarks
* Global dollar strength, capital controls weigh on rouble
* Confusion over central bank comments on rouble band
* Traders say rouble to strengthen again
MOSCOW, Nov 20 - The Russian rouble closed at a 10-day low against the dollar on Friday after downward pressure from global dollar strength and talk of capital controls was compounded by confusion about a central bank official's remarks.
The rouble <RUBUTSTN=MCX> closed at 29.005 to the dollar, after hitting its weakest level in two weeks at 29.1050 during the session. Against the dollar/euro basket <RUS=MCX>, used by the central bank to guide the exchange rate, the rouble closed at 35.4.
Traders said the easing was driven partly by misunderstanding of comments on Nov. 19 by the central bank's First Deputy Chairman Alexei Ulyukayev, who said the rouble's floating trading band was between 35 and 38 roubles against the basket. [ID:nLJ54381]
Many traders thought Ulyukayev was referring to a wider corridor between 26 and 41 roubles, where it had vowed to defend the rouble last February after its gradual devaluation, and that the central bank was moving to a more narrow float.
"The interpretation of Ulyukayev's words was probably not entirely correct but it had pushed investors to close long positions ," said trader Alexander Panasenko from Metallinvestbank.
Ulyukayev referred to the floating 3-rouble corridor, which moves by 5 kopecks or 0.05 roubles after the central bank buys or sells $700 million in the forex market. He did not imply the central bank will defend the exchange rate at its borders.
Oil, which fell more than $1 a barrel towards $76, also weighed on the rouble.
The central bank has waged a verbal attack this week to stop the rouble's rapid appreciation along with other major emerging currencies, saying Russia could consider various "soft" measures to curb "hot money" inflows and promising more rate cuts.
The central bank said measures could include changes in reserve requirements, caps on banks' open foreign currency positions and tax changes discouraging companies from raising money abroad.
Traders said the corporate tax payments, which normally soak up rouble liquidity, providing support for the currency, have had little impact on the rouble this time with money market rates <RUBOND=> staying low at around four percent.
Analysts said high longer-term interest rates in Russia are still making the rouble attractive for global carry-traders and with oil staying about $75 per barrel downside risks for the currency remained low.
"On the whole, there are no fundamental reasons for the rouble to weaken. I have a feeling that the rouble will continue to strengthen," said Vladimir Bragin from Trust Bank. (Reporting by Andrei Ostroukh; Writing by Gleb Bryanski; Editing by Ruth Pitchford)