At 9.30 am(0130 gmt), the local note was quoted at 3.9100/9150 versus the greenback from 3.9170/9200 on Friday.
NEW YORK: Stocks fell in major markets around the world on Tuesday, and emerging markets currencies lost ground while the dollar rose as investors braced for an escalation in the U.S.-China trade conflict.
Emerging markets stocks and currencies were under added pressure on concerns about inflation in Turkey and after data showed South Africa had slumped into recession in the second quarter.
U.S. President Donald Trump could follow through on plans to impose levies on $200 billion more of Chinese imports after a public comment period on his proposed new tariffs on Chinese goods is set to end on Thursday.
Also U.S.-Canada trade talks were expected to resume on Wednesday after the last round ended on Friday with no deal to revamp the North American Free Trade Agreement (NAFTA). Trump has told Congress he would sign a bilateral trade pact with Mexico.
"You have issues concerning NAFTA and China trade issues. You also have a storm in the Gulf of Mexico. What's really driving the market is a lack of direction one way or the other," said Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth LLC in New York.
The Dow Jones Industrial Average .DJI fell 12.34 points, or 0.05 percent, to 25,952.48, the S&P 500 .SPX lost 4.79 points, or 0.17 percent, to 2,896.73 and the Nasdaq Composite .IXIC dropped 18.29 points, or 0.23 percent, to 8,091.25.
The pan-European FTSEurofirst 300 index .FTEU3 lost 0.74 percent. MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.48 percent on track for its biggest one-day decline since Aug. 15.
MSCI's emerging market stocks index .MSCIEF was down 0.8 percent on track for its fifth straight day of declines.
The U.S. dollar rose broadly and investors shunned emerging market currencies as concerns about the U.S.-China trade situation boosted safe-haven demand for the greenback.
In currencies, the U.S. dollar index .DXY, which measures the greenback against a basket of major currencies, rose 0.27 percent, with the euro EURO down 0.32 percent to $1.1586.
The Canadian dollar weakened to a six-week low against its U.S. counterpart amid an uncertain outlook for Canada's trading arrangement with the United States.
The Canadian dollar fell 0.64 percent versus the greenback at 1.32 per dollar.
The dollar gained 3.3 percent on the South African rand ZAR=D3, and 1 percent against Turkey's Lira.
A JPMorgan emerging market currency index fell to its lowest since May 2017. The Mexican peso also slipped against the dollar.
"We are just waiting for something to turn the EM (emerging market) sentiment because the valuations look really attractive, but it's just a slow meltdown at the moment," said Standard Life Aberdeen EM portfolio manager Viktor Szabo.
U.S. Treasury yields rose to three week highs on Tuesday after data showed that U.S. manufacturing activity accelerated to a more than 14-year high in August, and on heavy corporate debt supply.
Benchmark 10-year notes US10YT=RR last fell 13/32 in price to yield 2.8985 percent, from 2.853 percent late on Friday.
The 30-year bond US30YT=RR last fell 34/32 in price to yield 3.0624 percent, from 3.009 percent late on Friday.
Oil prices were lower as the market prepared for potential supply disruptions due to a hurricane forecast to hit the U.S. Gulf Coast, but gains were capped by the strong dollar and a report that Cushing, Oklahoma, stockpiles rose last week.
U.S. crude CLcv1 fell 0.76 percent to $69.27 per barrel and Brent LCOcv1 was last at $77.73, down 0.54 percent on the day. - Reuters
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