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 The Indian rupee is likely to open slightly higher on Wednesday, aided by an uptick in its Asian peers, but traders reckon hedging demand from importers could limit the local unit's upside.

Non-deliverable forwards indicate the rupee will open at around 83.31-83.32 to the U.S. dollar, mildly stronger compared to its close of 83.3425 in the previous session.

Asian currencies rose between 0.1% and 0.6%, with the Korean won leading gains.

The rupee's opening rise may see some follow-through as the "risk on move should continue... 83.20 could be tested today," a foreign exchange trader at a private bank said.

But given that these levels would appeal to importers, it will be key to watch how much that hurdles the rupee's gains, the trader added.

The dollar index was lower at 105.63, declining nearly 0.4% on Tuesday after data showed that U.S. business activity cooled in April to a four-month low due to weaker demand.

"However, the dollar index should be underpinned at 105 by Thursday’s U.S. advanced GDP affirming the U.S.’s economic resilience and Friday’s U.S. PCE deflators tempering Fed cut bets," DBS Bank stated in a note.

With attention shifting away from tensions in the Middle East, the U.S. GDP data due on Thursday followed by PCE inflation data on Friday are in focus this week as investors gauge the potential timeline for rate cuts by the Federal Reserve.

Economists polled by Reuters expect the data to show that core PCE prices rose by 0.3% month-on-month in March.

Meanwhile, Brent crude oil futures rose 1.6% on Tuesday buoyed by weakness in the dollar and euro zone data that showed the region's business activity expanded at the fastest pace in nearly a year in April.

KEY INDICATORS:

** One-month non-deliverable rupee forward at 83.38; onshore one-month forward premium at 8.25 paisa

** Dollar index at 105.6

** Brent crude futures down 0.1% at $88.3 per barrel

** Ten-year U.S. note yield at 4.62%

** As per NSDL data, foreign investors sold a net $314mln worth of Indian shares on Apr. 22

** NSDL data shows foreign investors bought a net $113.2mln worth of Indian bonds on Apr. 22