(Adds Ignatyev comments, details, quotes)
* Russia seeks to set floor for rouble
* c.bank says will continue FX interventions
* Russia set for 1st recession in decade
By Gleb Bryanski and Yelena Fabrichnaya
MOSCOW, Jan 22 (Reuters) - Russia sought to put a limit on the rouble's two-month slide on Thursday, setting a floor 10 percent below current levels in a bid to see off speculators after the currency stabilised in recent sessions.
The statement ended a two-month long period of creeping devaluation as Russia strove to bring the currency in line with weak oil prices and an economy which the government expects to slip into its first recession in a decade this year.
Moscow has spent $200 billion, or a third of its reserves, since August on making the rouble's fall a gradual one, seeking to avoid panic among a population mindful of a 70 percent currency collapse during the 1998 crisis.
Analysts say Prime Minister Vladimir Putin's chances of returning to the Kremlin in 2012 hinge on the handling of the current turmoil, which has knocked nearly a fifth off the rouble and sent Russian stock markets to multi-year lows.
The central bank said it would stop widening the rouble
trading corridor from Jan. 23, setting the currency's boundaries
at between 26 and 41 versus a basket of 0.45 euros and 0.55
dollars. The rouble closed at 37.03
"But the Bank of Russia sees these risks as moderate and does not plan to change this boundary in the coming months."
The bank still has an arsenal of around $400 billion in currency reserves to back up the range and the rouble has already shown signs of resilience, accompanied by official signals that the depreciation could be nearing an end.
On Tuesday the currency posted its biggest ever rally versus the basket, and has held firm since then despite the central bank announcing further corridor widenings on Wednesday and Thursday.
"It is a sensible move. They had been very keen to avoid a sudden devaluation for political reasons so we have this instead," said Nigel Rendell, emerging foreign exchange strategist at Royal Bank of Canadain London.
"A lot of people have been short on the rouble for a long time and they might decide the game is up and close their positions so there might be some short-term support. But the longer-term trend is clearly down unless we get some kind of inversion in the oil price."
Central bank chief Sergey Ignatyev told a press conference that the regulator would continue to smooth out the rouble's path, intervening both at the boundaries and in between, and the decision took into account risks of speculative attack.
WATCHING OIL
The stabilisation of the rouble came as Russian companies faced heavy demand for cash this week to meet domestic tax payments, and some analysts were sceptical that the upbeat mood on the currency would last.
"This is likely just to build in expectations of more to come, and yet more capital flight. It probably buys the central bank some time, but that's about it," said Timothy Ash, analyst at RBS in London.
The central bank has argued that the softly-softly approach to devaluation has avoided the sort of panic rush to change savings into dollars that followed the rouble's slide in 1998.
Putin this week ordered that the 2009 budget be reworked at an average price of $41 for the country's key oil exports -- less than half the originally forecast $95 -- and the result is expected to be a budget deficit of around 8.5 percent of GDP.
Revised economy ministry forecasts obtained by Reuters showed gross domestic product will fall 0.2 percent this year.
Falling imports -- as the economy slows -- will likely keep the trade balance in surplus, supporting the rouble. But some say even the $41 oil assumption -- based on current prices of Russia's Urals export blend -- is optimistic.
Ignatyev said changes in the oil price could prompt a rethink on the rouble boundaries. "If the oil price falls to $30 per barrel and stays there, it is possible but not necessary that we will have to adjust the (upper) boundary," he said.
A cheaper rouble makes life easier for Russia's commodity exporters who have a rouble cost base but dollar earnings. But it is a tough pill to swallow for importers and for companies who have large foreign-currency debts to pay back.
-- For an INSTANT VIEW on Thursday's news see [ID:nLM12578]
-- For a FACTBOX on rouble moves see [ID:nRUBFACTS] (Additional reporting by Vlasta Demyanenko, Katya Golubkova in Moscow and Peter Apps in London; writing by Toni Vorobyova; Editing by Ruth Pitchford and Patrick Graham)