MOSCOW: The rouble hovered near a three-week high versus the dollar on Tuesday, ahead of an expected central bank rate hike later this week, while Russian stocks sunk to their lowest since April amid lingering political tension between Moscow and the West.

At 0740 GMT, the rouble was unchanged against the dollar at 73.49, close to its strongest since Nov. 22 of 73.25, hit on Monday. It had gained 0.1% to trade at 82.85 versus the euro.

Risk appetite was lower amid continued uncertainty about the Omicron coronavirus variant, while the dollar strengthened on expectations of a hawkish Federal Reserve meeting this week.

Russia’s central bank is expected to raise interest rates on Friday by 100 basis points as inflation hovers near its highest since early 2016.

Higher rates are positive for the rouble as they increase demand for Russian assets thanks to lucrative yields, and thus protect the currency from external shocks.

But the currency remains buffeted by East-West tensions, which are high with Ukraine, the United States and Western capitals voicing fears over a Russian troop buildup near Ukraine.

US intelligence assesses that Russia could be planning a multi-front offensive on Ukraine as early as next year, involving up to 175,000 troops. The Kremlin has dismissed such statements as fear-mongering.

Brent crude oil, a global benchmark for Russia’s main export, was up 0.3% at $74.59 a barrel.

Russian stock indexes were still under pressure from geopolitical uncertainty, Veles Capital said in a note, though a renewed rally in oil prices could foster some recovery.

The dollar-denominated RTS index was down 0.8% to 1,535.7 points, after touching its weakest since May 5 in early trade. The rouble-based MOEX Russian index was 0.9% lower at 3,587.1 points, after touching 3,532.29 points, its lowest since April 15, earlier in the day.