The rupee depreciated by 20 paise to 55.41 against the dollar in early trade on Thursday on fresh demand for the American currency.

Forex dealer said increased demand for the US dollar from oil importers mainly put pressure on the local unit, however, higher opening in the equity market and weak dollar against other currencies overseas capped rupee's losses.

Meanwhile, the BSE benchmark Sensex rose by 42.56, or 0.24%, to 18.024.86.

The rupee had gained 13 paise to 55.21 on persistent selling of dollars by banks in Wednesday's trade.