(Adds interventions, industrial output)
By Toni Vorobyova and Yelena Fabrichnaya
MOSCOW, Dec 15 (Reuters) - Russia allowed the sixth mini-devaluation of the rouble in five weeks on Monday, gradually caving in to downward pressure on the currency from falling oil prices and a worsening economic outlook.
A central bank source confirmed the trading band had been widened again on Monday. The rouble weakened to 32.21 against a basket of 0.55 dollars and 0.45 euros from 31.87 on Friday, taking its losses for five weeks to 5.5 percent.
The latest move came on the same day as Interfax news agency reported that industrial output slumped 8.7 percent year-on-year last month in what is probably the biggest decline in a decade. .
"Now our situation is painfully reminiscent of 1998, when the economy was just falling on these (rouble) devaluation expectations. It started growing again only after they devalued," said Anton Stroutchenevski, economist at Troika Dialog, calling for a more radical move on the exchange rate.
With memories of the 1998 financial crisis and rouble collapse still fresh in Russians' memories, authorities -- including Prime Minister Vladimir Putin -- have tried to allay public concerns by stressing that there will be no sharp moves.
Russia has seen its gold and forex reserves, the world's third largest, shrink by a quarter since early August to under $440 billion as the central bank has battled to defend the rouble in the face of falling oil prices, worsening economic fundamentals and broad capital flight from emerging markets.
With reserves shrinking fast, the central bank started widening the rouble's trading band by 30 kopecks in each direction at roughly weekly intervals from Nov. 11.
Most of the rouble devaluations versus the euro-dollar basket have coincided with periods of dollar weakness. As a result the brunt of the moves has been borne by the euro component of the basket, and this has minimised the pain for ordinary Russians who focus on the dollar/rouble rate."
Dealers said there were no major central bank interventions to defend the new rouble level on Monday, after the regulator spent an estimated $14 billion on currency support last week.
The devaluations have received scant coverage on Russia's mostly state-controlled television and to-date there are few signs of panic on the streets although statistics show people are slowly shifting money into foreign currency.
Versus the dollar, the rouble has lost less than 3 percent since Nov. 11 although it is down about 20 percent from summer peaks. The dollar hit a two-month low versus the euro on Monday .
Authorities seem sensitive to public perception of the situation -- after deputy economy minister Andrei Klepach said on Friday that Russia was entering a recession, Putin's press office went to great lengths to contradict this.
They have also taken steps such as hiking unemployment benefit that could help avert any possible future social unrest.
REMINISCENT OF 1998?
Alexei Ulyukayev, the central bank's first deputy chairman, said on Saturday the regulator was not about to scrap the rouble band but was moving towards "a quasi-free" float.
The price of Russia's main Urals oil blend has fallen 70 percent from its summer peaks to around $40 a barrel. Anything below $60 next year will mean further pressure on reserves as Russia will need the money to plug holes in its budget.
Russia is now in a much stronger position than a decade ago, with little state debt and the third biggest reserves in the world. But growth is slowing sharply and corporate debt is high.
"A strong rouble is generally viewed by the population as an important proxy for the competence of the state," Frank Gill, credit analyst at Standard & Poor's wrote in The Moscow Times.
"If key export prices remain weak, the relative prices of domestically produced goods to imported ones will need to adjust ... This is generally achieved via a sizeable exchange rate adjustment."
S&P Ratings Services last week became the first ratings agency to downgrade Russia in a decade, and now rates it two notches above junk.
Analysts polled by Reuters last month had forecast that the rouble would weaken as far as 33.44 to the basket by end-2009. -- For a FACTBOX on the rouble see -- For a TAKE-A-LOOK on Russian financial crisis (Writing by Toni Vorobyova; Editing by Stephen Nisbet)