The rupee was trading lower by 16 paise at 66.87 against the US dollar in early trade on Friday on higher demand for the American currency from importers and banks.

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Dealers attributed the rupee's fall to increased demand for the US currency, but dollar's weakness against some currencies overseas made sure the losses do not mount.

The domestic unit closed lower by 6 paise at 66.71 in Thursday's trade due to fag-end dollar demand from banks and exporters on the back of higher crude oil prices amid a fall in domestic equities.

Meanwhile, the benchmark Bombay Stock Exchange (BSE) Sensex fell 80.38 points, or 0.30%, to 26,683.08 in early deals.