MOSCOW, Dec 23 (Reuters) - The Russian rouble

strengthened against the U.S. dollar on Monday as the central

bank's decision to keep its key interest rate on hold was

outweighed by other factors.

The rouble was up 1.3% at 101.70 against the dollar

by 0845 GMT, over-the-counter market data showed. The rouble

strengthened 0.8% to 13.85 against China's yuan in trading on

the Moscow Stock Exchange.

The Russian central bank kept its key interest rate on hold

at 21% on Dec. 20, surprising a market that had expected an

increase of two percentage points. The bank said that recent

tightening had created conditions for inflation to fall towards

its target.

"This came as a surprise and would have previously caused

the national currency to fall due to arbitrage. But with carry

trade impossible since 2022, other factors currently favour the

rouble," said analysts at brokerage BCS.

Analysts said the rouble was supported by the market's

gradual adjustment to new U.S. financial sanctions and by the

looming corporate tax payment period, ahead of which exporting

companies convert foreign currency into roubles.

The rouble fell as much as 15% against the dollar in

November after U.S. sanctions hit Russia's third-largest lender,

Gazprombank.

Some of the lost ground has been regained since then, with

the rouble stabilising above 100 to the dollar. That is now

viewed by the market as a new equilibrium level where the

currency could remain for some time provided there are no

further external shocks.

One-day rouble/dollar futures, which trade on the Moscow

Stock Exchange and are a guide for the over-the-counter exchange

rate, were down 1.3% at 103.43. The Russian central bank set an

official exchange rate at 102.34 to the dollar.