The rupee depreciated 7 paise to 66.97 against the US dollar in early trade at the Interbank Foreign Exchange market today on fresh demand for the American currency from importers and banks.

Dealers attributed the rupee’s fall to fresh demand for the US currency from importers, but a firm domestic equity market and the dollar’s weakness against some currencies overseas capped the losses.

Yesterday, the rupee had extended gains for the second straight day by moving up another 3 paise to close at 66.90 per dollar on sustained selling of the US currency by banks and exporters.

Meanwhile, the benchmark BSE Sensex recovered by 109.11 points, or 0.38 per cent, to 28,264.67 in the opening trade.