The Indian rupee ended marginally higher on Tuesday on expectations of foreign inflows into domestic debt that will be included in a global index later this week.

The rupee settled at 83.4325 against the U.S. dollar from its previous close at 83.4600. Gains in the rupee were, however, limited due to month-end dollar demand from importers, two traders said.

Indian bonds will be included in the widely tracked JP Morgan emerging market index on June 28, spurring inflows of about $2 billion.

The $2-billion single-day inflow estimate by bankers trails only the record-high $2.7 billion poured into Indian bonds on Aug. 20, 2014.

"Market participants are optimistic about the debt market inflows from the global bond inclusion," said Dilip Parmar, a foreign exchange research analyst at HDFC Securities, adding the inflows could initially probably be lower than what the market expects.

Parmar pegged the rupee in an 83.30 to 83.70 range in the short term.

Traders also expect the Reserve Bank of India to absorb inflows and boost its forex reserves, which in turn could limit volatility in the rupee.

Meanwhile, Asian currencies were mostly higher, aided by a broadly weaker dollar. The dollar index dropped 0.3% on Monday, retreating from multi-week highs.

Investors will be eyeing comments from Federal Reserve officials and the U.S. consumer confidence data due later in the day for cues on when the central bank could begin its rate-cutting cycle.

The rupee was also supported by India's current account balance surplus for the first time in 10 quarters in the January-March quarter. (Reporting by Siddhi Nayak; Editing by Sohini Goswami)