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MOSCOW, July 22 (Reuters) - The Russian rouble eased slightly in early trade on Friday, lacking momentum as the market awaited the central bank's rate-setting meeting that is expected to deliver the fourth cut so far this year.
At 0719 GMT, the rouble was 0.4% weaker against the dollar at 56.87 and eased 0.2% to 57.37 against the euro on Moscow Exchange.
The rouble has become the world's best-performing currency http://fingfx.thomsonreuters.com/gfx/rngs/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html so far this year, boosted by measures - including restrictions on Russian households withdrawing foreign currency savings - taken to shield Russia's financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb. 24.
Before Feb. 24, the rouble traded near 80 to the dollar and 85 to the euro.
The rouble's strength has concerned officials as it dents Russia's income from exporting commodities and other goods priced in dollars and euros. To ease upside pressure on the currency, Russia relaxed some capital controls this week, allowing banks from designated "unfriendly countries" to trade between foreign currencies on the Russian forex markets.
The central bank, which supports the idea of the free-floating rouble, can further ease upside pressure on the currency in the long run by cutting rates later on Friday and thus trimming yields of rouble-denominated bonds.
The majority of analysts polled by Reuters in mid-July had expected the central bank to cut the key interest rate by 50 basis points to 9% but the latest data on inflation and inflationary expectations raised chances for a sharper cut.
The central bank will announce its rate decision at 1030 GMT and Governor Elvira Nabiullina will shed more light on monetary policy and other issues at a media conference at 1200 GMT.
The rate decision and the bank's message to the market may not have an immediate impact on the rouble but can move prices on the bond market, especially given the finance ministry's plans to return to borrowing via OFZ bonds in September after halting weekly bond auctions in February.
On the stock market, the dollar-denominated RTS index was 0.4% higher at 1,146.2 points. The rouble-based MOEX Russian index rose 0.9% to 2,072.8.
For Russian equities guide see
For Russian treasury bonds see
(Reporting by Reuters; Editing by Christian Schmollinger)
