UPDATE 2-Rouble hits highest since July vs dollar after Russian rate hike

* Rouble hits 71.55 vs dollar, strongest since July 2020

* Rouble crosses 87 threshold vs euro

* hikes key rate to 5.5%, as forecast

* MOEX hits record high of 3,849.32 points (Updates prices, adds Nabiullina quote)

MOSCOW, June 11 (Reuters) - The Russian rouble firmed to its strongest against the U.S. dollar since last July on Friday after the central bank raised interest rates by 50 basis points, with higher oil prices adding support.

The rate hike to 5.5% was expected by economists after high inflation in May prompted a broad revision of forecasts, and Central Bank Governor Elvira Nabiullina said the move was already priced in on the foreign exchange market.

Minutes after the central bank raised rates and flagged more hikes this year, the rouble hit 71.55, a level last seen on July 27. By 1343 GMT, it had backtracked to stand little changed on the day at at 71.78.

“It is now looking increasingly likely that there will be an additional 50-75bp of hikes, to 6.00-6.25%, by year-end,” Capital Economics said.

Versus the euro, the rouble added 0.4% to 87.01 , earlier crossing the 87 threshold for the first time since March 17.

Higher rates support the rouble by making it more attractive for carry trades in which investors borrow low-yielding currencies, such as the U.S. dollar, and convert them into roubles to buy high-yielding bonds.

“On the whole, raising rates makes rouble assets more attractive,” said Nabiullina. “We do not see any large-scale carry trade risk here.”

The rouble, which was buffeted by fears over new Western sanctions against Russia earlier this year, has been on the mend in recent weeks ahead of a meeting between U.S. President Joe Biden and Russia’s Vladimir Putin on June 16.

This meeting is seen as a sign that more sanctions are not inevitable after the United States barred its banks from buying OFZ government bonds directly from Russia from mid-June.

Trading on Monday will be thin due to a public holiday.

Brent crude oil, a global benchmark for Russia’s main export, was up 0.2% at $72.66 a barrel, heading for a third weekly rise.

Russian stock indexes were also higher.

The dollar-denominated RTS index gained 0.5% to 1,686.1 and the rouble-based MOEX Russian index was 0.4% higher at 3,841.6 points, earlier touching an all-time high of 3,849.32 points. (Editing by Kirsten Donovan)