UPDATE 1-Rouble slides to one-month low, Russian stocks drop on windfall tax proposal


This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine

(Updates prices, adds windfall tax)

MOSCOW, Feb 8 (Reuters) - The rouble weakened on Wednesday, sliding to a one-month low against the dollar as market demand for foreign currency overpowered government sales, while stocks headed lower on proposals for a one-time windfall tax on big businesses.

By 1109 GMT, the rouble was 0.6% weaker against the dollar at 71.60, its weakest mark since Jan. 9. It had lost 0.9% to trade at 76.77 versus the euro and had shed 0.9% against the yuan to 10.55.

"Despite the introduction of a price ceiling on Russian oil products, the potential for a sharp weakening of the rouble is limited by the government's activity on the foreign exchange market," Egor Zhilnikov of Promsvyazbank said. He expected the rouble to trade at 70.5-71.5 to the dollar on Wednesday.

Russia is now selling 8.9 billion roubles ($124 million) worth of foreign currency per day, compensating for lower oil and gas revenues, down 46.4% year-on-year in January.

Slumping energy revenues and soaring expenditure pushed Russia's federal budget to a deficit of about $25 billion in January, as sanctions and the cost of Moscow's military campaign in Ukraine weigh on the economy.

The Bank of Russia raised a record $74 billion at a deposit auction on Tuesday from a banking sector flooded with excess liquidity, which analysts say could further limit room to ease monetary policy.

The central bank is widely expected to hold its key interest rate at 7.5% on Friday, but to give a more hawkish signal to the market as inflationary risks become more pronounced.

"Unfortunately, there are no theses that the rate will be lowered. The reason is that the situation with inflation looks unpredictable for now," Anatoly Aksakov, head of the financial committee in Russia's lower house of parliament, said in an interview with Russia's parliamentary newspaper.

Brent crude oil, a global benchmark for Russia's main export, was up 0.8% at $84.4 a barrel.

Russian stock indexes dropped as First Deputy Prime Minister Andrei Belousov said Russia was considering a voluntary windfall tax.

The dollar-denominated RTS index was down 1% to 994.0 points. The rouble-based MOEX Russian index was 0.4% lower at 2,258.9 points, falling away from a near five-month high hit on Tuesday.

($1 = 71.5000 roubles) (Reporting by Alexander Marrow Additional reporting by Elena Fabrichnaya Editing by Andrew Heavens and Mark Potter)