The Indian rupee closed flat on Thursday as dollar demand from local oil companies and likely equity-related outflows weighed on the local unit even as most other Asian currencies rallied.

The rupee ended at 83.50 against the U.S. dollar, unchanged from its closing level in the previous session.

The dollar index ticked higher to 104.4 after dropping 0.7% on Wednesday in light of data that showed U.S. consumer inflation rose less than expected in April, while retail sales were flat month-on-month.

U.S. Treasury yields fell as data boosted expectations that the Federal Reserve will cut interest rates two times this year. Investors are currently pricing in 50 basis points of cuts this year, up from 45 basis points on Tuesday.

While improved odds of Fed rate cuts sparked a rally in most Asian currencies, the rupee remained on the sidelines amid strong dollar demand from local oil companies and foreign banks, likely on behalf of custodial clients, traders said.

The Korean won and Thai baht led gains among Asian currencies and were up 1.6% and 1.1%, respectively.

Equity-related outflows have maintained pressure on the rupee in recent trading sessions as foreigners have pulled out over $3 billion from Indian stocks amid jitters about the upcoming outcome of the national election.

"Despite short-term pressure on the rupee due to internal factors, external conditions have turned in its favour," Amit Pabari, managing director at FX advisory firm CR Forex, said. Pabari expects the domestic currency to rise towards 83.20 in the near term.

Meanwhile, dollar-rupee forward premiums ticked higher with the 1-year implied yield up 2 basis points at 1.70% aided by a dip in US bond yields.

Investors now await U.S. jobless claims data and remarks from Federal Reserve policymakers due later in the day. (Reporting by Jaspreet Kalra; Editing by Sohini Goswami)