The Indian rupee ended slightly higher on Wednesday as dollar demand from local oil companies and importers ate into the local currency's early gains, while an uptick in the dollar index also weighed.

The rupee closed at 83.3225 against the U.S. dollar, moderately higher than its close of 83.3425 in the previous session.

The dollar index was up about 0.2% at 105.8, trimming its losses from Tuesday after data showed that U.S. business activity eased to a four-month low in April due to weaker demand.

The dollar-rupee pair saw "sustained bids" below 83.30, which helped "form a floor," a foreign exchange salesperson at a private bank said.

The appetite to lap up dollars on the dip eroded the rupee's gains to a two-week high of 83.2625 earlier in the session.

Most Asian currencies were higher, with the Korean won and Indonesian rupiah advancing by 0.5% and 0.4%, respectively.

Indonesia's central bank delivered a surprise rate hike on Wednesday, ramping up efforts to support the country's currency which was pressured by risk aversion last week and delayed expectations of U.S. rate cuts.

Meanwhile, dollar-rupee forward premiums ticked higher, with the 1-year implied yield up 2 basis points at 1.68%.

While the local currency is expected to be stable in its prevailing range in the near term, "medium-term expectations lean towards rupee appreciation," said Amit Pabari, managing director at FX advisory firm CR Forex.

Investors now await the release of U.S. GDP data on Thursday and personal consumption expenditure (PCE) inflation data on Friday for cues on the potential timeline of rate cuts by the Federal Reserve.

The Fed is widely expected to keep rates unchanged at its upcoming meeting in May and markets currently expect the easing cycle to begin in September, according to CME's FedWatch tool. (Reporting by Jaspreet Kalra; Editing by Savio D'Souza)