Russian rouble falls vs US dollar ahead of key rate decision

MOSCOW, June 6 (Reuters) - The Russian rouble fell against the U.S. dollar on Friday ahead of the central bank's decision on its key interest rate and after strengthening late in the previous session.

By 0735 GMT, the rouble RUB= was down 2.9% at 79.50 per U.S. dollar, according to LSEG data based on over-the-counter quotes. The rouble has rallied by around 40% against the greenback so far this year.

A Reuters poll of 26 economists showed on Monday that the central bank was expected to keep its main interest rate on hold at 21% at its board meeting on Friday, but might soften its rhetoric and signal rate cuts later in the year.

A growing number of analysts are saying that with the sharp slowdown of the economy and a decelerating inflation rate, the central bank might surprise the market with a cut at the upcoming meeting, triggering a weakening of the rouble.

"The decision regarding the rate will have a significant impact on the currency market," said Alexei Antonov from Alor brokerage, stressing that even if there was a cut, the key interest rate would remain very high.

"Therefore, the rouble's reaction to the results of the central bank's board meeting may be strong but relatively short-lived," Antonov added.

Against the Chinese yuan, the most traded foreign currency in Russia, the rouble weakened by 0.39% to 11.01 on the Moscow Stock Exchange. The central bank uses yuan for foreign exchange interventions.