Hundreds of anti-Kremlin protesters took to the streets on Tuesday after Russia's opposition leader, Alexei Navalny, was found guilty of embezzling money and was given a suspended sentence by a Russia court. His brother, Oleg Navalny, was jailed for 3 ½ years. Police moved in and disbursed the protesters within two hours, according to media reports.
The Russian currency depreciated sharply against the dollar in the morning session and was trading at 58.64 by 10.30 GMT after ending Tuesday's session at 55.29. The currency has hit an all-time low in 2014 and has declined around 70 percent since the start of the year.
Political analysts remain split on what the tensions could ultimately mean for President Vladimir Putin, however.
Chris Weafer, a senior partner at Macro-Advisory, said Putin's approval ratings could take a hit from both the economic and political volatility.
The country is due to fall into a recession next year having been hit hard by the dramatic fall in oil prices and international economic sanctions following its military incursions in Ukraine. With these in mind, Weafer said that opinions could start to waver after a spike in Putin's approval ratings earlier this year.
"People will start to feel this economic slowdown in their own lifestyles, in their own pockets this year. And that's bound to have an impact on the approval ratings for the government," he said.
He explained that after decades of Soviet rule, many Russians have become used to living more affluent lifestyles. This, he said, meant that it was hard to predict how well modern urban Russians would cope with hardship -- and how that would play out in the coming year.
But Weafer added that a fall in Putin's popularity was unlikely to be dramatic. Earlier this month, the president was named "person of the year" by Russia's Public Opinion Foundation.
"We're not talking about a collapse (in approval ratings) or anything that would raise questions of instability," Weafer said.
Alexander Kliment, the director of emerging markets strategy at research firm Eurasia Group, described a "strong police presence" at Tuesaday's unsanctioned protest in a research note. He said it was an example of the Kremlin sending a strong deterrent signal to potentially disillusioned elites and opposition activists.
However, he argued that the long-term impact on Putin of the ruling and the subsequent protest would be fairly limited.
"The Navalny trial's outcome is not a turning point for Russian politics, but it is an indicator of how the Kremlin perceives its priorities and vulnerabilities ahead of a year in which economic and geopolitical stresses will become much more acute," he said late Tuesday.
"Despite strong support from a segment of the upper middle class in Moscow and St Petersburg, Navalny remains a relatively marginal figure."
Economic grievances are rising, he conceded, but said that Russians are not, on the whole, ascribing them to Putin or viewing them as motivations to support opposition figures.
Follow us on Twitter: @CNBCWorld