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MOSCOW, Feb 11 (Reuters) - The Russian rouble gained a record 1.9 percent versus a euro-dollar basket on Wednesday, boosted by liquidity constraints and, at least for now, turning its back on a period of virtually daily devaluations.
Central bank efforts to draw a line under the rouble's fall appear to be working -- the rouble closed at 39.77 to the basket on Wednesday, up a record 1.9 percent or 77 kopecks, and moving further away from the 41 boundary of its trading band.
"The market is playing on a theme of a strengthening rouble and the (central bank) warnings that rouble liquidity will be reduced," said Viktor Kholoshnoy, trader at Gazprombank.
A sure fire appreciation bet while Russia's economy boomed on soaring oil prices, the rouble's fortunes reversed abruptly in August when a brief war with Georgia and high-profile corporate wrangles spooked investors. A collapse in the oil price and the worst economic outlook in a decade kept the currency falling.
Russia was forced to spend a third of its reserves or some $200 billion to cushion the devalaution process and stopped only late last month, once the rouble had lost over a quarter of its value versus the basket.
The central bank then called on its full arsenal to ensure the rouble stays within its new trading band: hiking rates, limiting the money on offer at its liquidity operations and cautioning investors against depreciation bets.
Wednesday's jump in the rouble was the biggest since the current composition of the basket -- at 0.45 euros and 0.55 dollars -- was set two years ago. Before embarking on gradual rouble depreciation, the central bank had been allowing only gradual appreciation in steps of around 10 kopecks at a time.
Illustrating the demand for roubles, bids at Wednesday's two one-day repo auctions topped 250 billion roubles, while the central bank allocated 153 billion.
Russia's monetary base fell to 3.8 trillion roubles as of Feb. 2, its smallest since late 2007, weekly data shows.
"A shrinking money base supports our expectations that devaluation of the rouble is over, at least for the next several months, as it creates a shortage of the domestic liquidity necessary for further run on the rouble," Unicredit said in a note. (Reporting by Andrei Ostroukh and Toni Vorobyova; Editing by Ruth Pitchford)