(Adds unemployment, GDP forecasts, quotes)
By Gleb Bryanski and Toni Vorobyova
MOSCOW, Dec 29 (Reuters) - Russia allowed the ninth mini-devaluation of the rouble this month on Monday, bringing the currency's losses to more than 18 percent since August as the oil-funded economy faces growing risks of recession.
Russia's central bank began a gradual depreciation of the rouble a month and a half ago due to downward pressure on the currency from slumping oil prices, a worsening economy and investors' flight from emerging markets.
As Prime Minister Vladimir Putin faces his first major economic crisis, authorities have been at pains to rule out any sharp rouble moves. Russians are mindful of the 1998 currency collapse, especially as unemployment is on the rise and real disposable income is falling. The rouble had weakened as far as 35.08 to a euro-dollar basket in the first minutes of trade on Monday before stabilising around 34.80, according to Reuters data, down around 1.5 percent or 50 kopecks from its close on Friday.
A central bank source confirmed the trading band had been widened. The previous support level was about 34.30.
The currency is now down 17 percent so far this year and 18.6 percent below historic peaks in August. Since then the price of oil, the main export of Russia's resource-focused economy, has fallen over 70 percent.
"With such a backdrop, which has turned sharply negative ... we will most likely get another 10 percent (rouble devaluation) in January," said Anton Tabakh at Troika Dialog, noting the array of problems the Russian economy faces. "The coffin on wheels has found its way into our street and is looking for a way into our house," he said.
NO PAINLESS WAY OUT?
Unlike a decade ago, when Russia had little choice but to allow a currency collapse, this time it has the world's third biggest reserves and has used over $100 billion of the now-$450 billion cash pile to help smooth out exchange rate moves.
The central bank's first deputy chairman Alexei Ulyukayev said on Friday Russia will not alter its policy of allowing the rouble to weaken gradually, and will not allow a one-off move.
So far there have been no major protests in Moscow about the financial crisis, and state-controlled television channels have devoted little air time to rouble devaluations.
But officials say rising unemployment and a fall in real disposable income could lead to greater unrest.
Health & Social Development Minister Tatyana Golikova said on Monday that the number of Russians officially registered as unemployed could reach 2.1 to 2.2 million people next year.
That represents a 69 percent increase from the 1.30 million officially registered as unemployed in November. The actual jobless figure, including those not claiming benefits, was 5.0 million in November, the state statistics agency reported.
At the same time, the economy is expected to have contracted this month. Prime Minister Putin on Monday estimated that full year GDP growth will stand at 6.0 percent, down from the 6.5 percent expansion reported in the first 11 months.
Some analysts still reckon that despite possible social unease, a free-floating exchange rate is the only way forward.
"Of course there will be panic, but there is no painless way out of the current situation," said Maxim Oreshkin at Rosbank.
"The question is what is ultimately worse for the population: the loss of some value of their savings, or the ongoing devaluation expectations which lead to high (interbank interest rates), resulting in job cuts."
(Additional reporting by Yelena Fabrichnaya; Editing by Ruth Pitchford)