INDIA RUPEE-Rupee slips as H-1B visa fee hit for Indian stocks drags sentiment

MUMBAI, Sept 22 (Reuters) - The Indian rupee closed slightly weaker on Monday as new U.S. visa norms weighed on markets and dragged IT stocks lower, with traders expecting the currency to stay under pressure until there is progress on U.S.-India trade talks

The rupee INR=IN closed at 88.3075 against the U.S. dollar, down 0.2% on the day.

India's benchmark equity indexes, the BSE Sensex .BSESN and Nifty 50 .NSEI ended lower by 0.5% each.

Domestic listed IT stocks .NIFTYIT fell nearly 3% after U.S. President Donald Trump imposed a $100,000 fee on new H-1B visa applications, raising costs and threatening growth in their biggest market.

"India stands out as the key country which could be negatively affected disproportionately by these visa changes," MUFG said in a note. "From an FX perspective, we think this development gives us more confidence that the Indian Rupee will underperform Asian FX and core G10 crosses," the note added.

Worries over steep U.S. tariffs have weighed on the rupee, down 3% this year versus 3%–6% gains in the offshore yuan and Korean won. On Monday, traders cited dollar demand from foreign and private banks pressuring the rupee even as the greenback slipped against major peers.

The dollar index was last down 0.2% at 97.47 as traders looked ahead to a slew of speeches from Federal Reserve officials throughout the week that could provide further clues to the U.S. rate outlook.

Money markets are currently pricing in a near 92% chance of a rate cut by the Federal Reserve in October, per CME's FedWatch tool.