India's Rupee closed Wednesday trading higher, boosted by likely inflows and a fall in US bond yields, however, the Dollar demand from state-owned banks limited the Rupee's ascent after it reached its highest level in almost three weeks.

The Rupee ended the day at 83.1850 against the Dollar, a 0.16% rise compared to the previous close of 83.3150. The currency hit an intra-day top of 83.16, its strongest since 21st March, Reuters reports.

The Dollar index, measuring the currency against six major peers, moved down to 104.06. Whereas it was a mixed bag for Asian currencies, with the Thai Bhat down 0.2% whilst the Indonesian Rupiah rose 0.3%.

Earlier on in the session, a foreign exchange trader at a foreign bank said that the Rupee was supported by "bunched-up dollar inflows" due to the closure of the currency and debt markets on Tuesday.

However, Dollar bids from state-run banks diminished some of the early gains, the trader went on to add.

The key focus remained on US inflation data due later on Wednesday, which is forecast to affect expectations of when the Federal Reserve may start easing rates.

The chances of a rate cut in June by the Fed have fallen to 54%, a decline from around 73% a month ago, as per the CME FedWatch tool.

The inflation data is predicted to show core consumer price inflation (CPI) edged up 0.3% month-on-month in March, a fall from the 0.4% increase in February, according to economists surveyed by Reuters.

A significant positive move in US inflation data could potentially lead to a depreciation of the Rupee towards the range of 83.30-35, said Gaurang Somaiya, a foreign exchange research analyst at Motilal Oswal Financial Services.

Investors will also be closely monitoring the Fed's March policy meeting minutes and subsequent statements from policymakers.

Financial markets in India will be closed on Thursday for a local holiday.