Hi Ashwini,
The DAC348x family output compliance voltage is rated for -0.5V to +0.6V range for each pin (i.e. Ioutp/Ioutn). Therefore, exceeding the compliance voltage could cause higher distortion levels.
You may see the application note below for detail.
http://www.ti.com/lit/an/slua647/slua647.pdf
Could you try to reduce the full-scale current to 20mA (i.e. coarse DAC gain of 10) to see if distortion level improves?
-Kang