UPDATE 1-Rouble trades in China, more currenices to come

* China trying to promote yuan's use in region and world

* Russia also seeking to reduce reliance on dollar

* Rouble trades at 4.6711 against yuan in early session

* Yuan can rise or fall 5 pct vs rouble each day

* South Korea's won may be next to come to China -analysts (Adds trading details, comments, background)

By Lu Jianxin and Jason Subler

SHANGHAI, Nov 22 (Reuters) - China's yuan started trading against the Russian rouble in the Chinese onshore forex market on Monday, the latest currency pair to be introduced as part of Beijing's efforts to promote the use of its currency.

The step is part of Beijing's efforts to expand the use of the yuan for trade and even investment purposes, as a way of reducing reliance on the dollar and thereby simplifying the settlement of trade in everything from energy to manufactured goods.

The rouble is the seventh currency traded against the yuan in the China Foreign Exchange Trade System (CFETS).

China launched trading between the yuan and the Malaysian ringgit in August, joining the U.S. dollar, Hong Kong dollar, yen, euro and sterling.

Russia is also trying to raise the profile of the rouble after the crises of the 1990s and has called for a reduction in reliance on the dollar as a global reserve currency.

A Russian exchange official said last week that Russia would also start yuan/rouble trading in December, after plans for the launch of such trade were unveiled in September. [ID:nLDE68711E]

"China is now vigorously promoting the yuan's use in the region and in the world partly because it is unhappy with the dollar's performance since the latest global financial crisis," said a dealer at a major European bank in Shanghai.

"To achieve that goal, it needs to allow more currencies to trade against the yuan at the CFETS, with the won likely to be the next to be introduced."

SNUBBING THE DOLLAR

The rouble traded at 4.6711 versus the yuan in early trade, traders said, the same level as the mid-point set by the People's Bank of China (PBOC), reflecting a cautious approach at the launch of the new currency pair.

The yuan will be permitted to rise or fall 5 percent against the rouble each day from the mid-point, CFETS, a unit of the central bank, said in a statement. The Chinese currency is still not freely convertible under the capital account.

The yuan-rouble trading range is the same as that for yuan/ringgit, but is wider than the 0.5 percent the yuan may move against the dollar in either direction each day and the 3 percent leeway allowed against most other currencies.

The wider band for yuan/rouble reflects the greater volatility of currencies of emerging economies, CFETS said.

China, the biggest holder of U.S. Treasuries, has complained about the dollar's volatility since the financial crisis, urging stability of global reserve currencies.

Increasing the number of currencies traded against the yuan will gradually help reduce the dollar's weight in the yuan's nominal real exchange rate (NEER), or the currency's value against a trade-weighted basket, traders said.

Most China-based traders believe that the dollar accounts for about 70 percent in the Chinese NEER system. Many Western analysts believe such a NEER system is still highly correlated to the dollar, although Beijing has persistently said it is using a basket system to price the yuan.

Among other steps to regionalise and internationalise the yuan, China has launched a programme to use the yuan for settlement in exports and imports, and allowed the development of a nascent offshore yuan market in Hong Kong.

Beijing last month also started a pilot programme for allowing some inbound and outbound foreign direct investment in the far western region of Xinjiang to be settled in yuan. [ID:nTOE69T009]

(Editing by Ken Wills)