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UPDATE 3-Russian rouble up from lows in jittery trade, eyes on Belarus and Navalny

* Russian rouble recovers vs dollar from lowest since April

* Volatility remains high on geopolitical concerns

* Putin says ready to help Belarus leader if needed

* Belarus rouble falls to fresh record lows but bonds recover (Updates with rouble gains, adds detail on Belarus, comments)

MOSCOW, Aug 27 (Reuters) - The Russian rouble bounced off multi-month lows in volatile trade on Thursday after the U.S. Federal Reserve presented its new strategy, but gains were capped by geopolitical concerns related to Moscow’s role in the Belarus crisis.

The rouble tumbled after President Vladimir Putin said in a televised interview the Kremlin had set up a “reserve police force” to support Belarusian leader Alexander Lukashenko.

Putin said however it would not be deployed unless unrest there got out of control.

Moscow’s initial response to the crisis in Belarus “had been relatively muted which made it somewhat more difficult to assess the situation,” said Trieu Pham, EM Sovereign Debt Strategist at ING.

“Today’s interview indicates stronger support for Lukashenko and the proposed dialogue about constitutional reforms.”

At 1452 GMT, the rouble was 0.3% stronger against the dollar at 75.43, heading away from 76.0025 reached on Wednesday, its weakest since April.

The Fed said it would roll out an aggressive new strategy that aims to boost employment and allow inflation to run faster than in the past, a policy that is seen leading to a potentially weaker dollar.

Versus the euro, the rouble gained 0.8% to 88.54 , up from Wednesday’s low of 89.8050, a level last seen in February 2016. It had been as strong as 70 per euro in early 2020.

Adding to the pressure on the rouble this week and fuelling concerns about more sanctions, the Kremlin has also declined for now to investigate the circumstances surrounding the sudden illness of opposition politician Alexei Navalny, which German doctors said could be from poisoning.

“It is worth noting that, despite making political noises, western countries have not really imposed sanctions on Russia for persecution of domestic Kremlin critics,” said Tatha Ghose at Commerzbank in London.

“While some caution may be prudent when it comes to the rouble, the base-case assumption is that the risk spike will fade in coming months, with the higher oil price then having a positive impact on the exchange rate.”

On the stock market, the dollar-denominated RTS index fell 0.8% to 1,263.4 points but the rouble-based MOEX Russian index slid 1.3% to 3,011.4 points.

BELARUS

The Belarusian rouble hit an all-time low of 2.6640 against the dollar and a fresh record low of 3.1562 versus the euro as Lukashenko said he had agreed the refinancing of a $1 billion loan with Putin.

Belarus sovereign dollar-bonds raced higher, far outpacing peers with some issues and adding as much as 3 cents in the dollar, trading around par.

Pham from ING said the fact that Belarus’ next payment on bonds was not due until 2023 and the lion’s share of external redemptions in the meantime – around 40% - was owed to Russia played in the country’s favour.

“The combination of Putin’s interview and the headline of Belarus seeking to refinance this year’s debt certainly provides some comfort as it smooths external financing pressure in the near-term and down the road,” said Pham.

For Russian equities guide see

For Russian treasury bonds see

Reporting by Andrey Ostroukh in Moscow and Karin Strohecker in London; editing by Barbara Lewis, Chizu Nomiyama and Jan Harvey

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