By comparison with the swathe cut through eurozone credit ratings by Standard and Poor’s, it was nothing.

But Fitch’s decision on Monday to switch from positive to stable on Russia is worth noting. It shows that even a country with $500bn in foreign reserves can’t afford to take the markets for granted when protesters are in the streets demanding the end of the rule of Vladimir Putin.

Confirming Russia’s BBB rating,  Charles Seville, a Fitch director, said: “Political uncertainty in Russia has risen and the global economic outlook has worsened since Fitch last affirmed the rating in September 2011. The likelihood of an upgrade has receded and the balance of risks is better reflected by a Stable Outlook.”

From Fitch:

Political risk, reflected by poor governance indicators, is a long-standing weakness compared with most other ‘BBB’ rated countries, and recent events have highlighted the limitations and risks associated with Russia’s political model.

The Fitch move may not trigger any comparable responses from the other two big international credit rating agencies as only Fitch had Russia on a positive outlook – meaning that it was considering a possible future upgrade. Standard & Poor’s has Russia on the same rating as Fitch, BBB. Moody’s has it one notch higher at Baa1.

Fitch believes prime minister Putin is still the strong favourite to win presidential elections on March 4. But it is “unclear” how the country’s leadership will respond to the unexpected wave of protests triggered by the December Duma elections.

Again from Fitch:

In the long term, democratic development that leads to better governance could be positive for Russia’s ratings, but in the short term, uncertainty has increased.

These dangers include capital flight, with net private sector capital outflows reaching $84bn in 2011, up from $4bn in 2010, but well below the $134bn seen in 2008.

Also, said Fitch, a government under popular pressure may be less inclined to carry out a fiscal adjustment, to reduce the non-oil fiscal deficit towards its pre-crisis target of 4.7 per cent of GDP and recognise that $117 a barrel is too high a price at which to plan to balance the budget.

The external finances are strong. So, Russia has some room for manoeuvre, but less than it did in 2008, when the budget balanced at a much lower oil price. Putin is not short of financial firepower. The question is how will he use it in the face of the new challenges that have emerged. That’s why Fitch is sounding a note of caution.

The Financial Times