The rand had been underperforming its peers even before the report as investors fretted over the country’s struggles with energy shortages and China’s growth hiccups. Mixed data from China have worsened the outlook for South Africa’s exports, while crippling power outages are threatening to erase any growth this year. The remarks by the US have added a new dimension to the risk factors.

“For many, the fortunes of the rand are becoming more overtly entwined with the political prospects of the African National Congress,” said Robert Hoodless, an analyst at InTouch Capital Markets. “President Cyril Ramaphosa seems nowhere to be seen. Perhaps this is because of yet another calamitous diplomatic decision over relations with Russia.”

The US is convinced that South Africa had supplied weapons and ammunition to Russia, despite Pretoria having taken a neutral stance on its invasion of Ukraine, News24 reported cited Ambassador Reuben Brigety as saying.

“The Presidency has noted the reported remarks attributed to the US Ambassador, and we will respond in due course,” Vincent Magwenya, South African President Cyril Ramaphosa’s spokesman, said in a tweet.

Concerns over the inability of authorities to resolve South Africa’s continuing power supply crisis are also weighing on the rand. The nation’s central bank is among those to have reduced growth projections for 2023 to near-zero because of the persistent energy shortages.

“No matter how hard one tries to shutter out the scenes, investors continue to tell us that the underlying issue for the rand is governance,” Hoodless said. “When the negativity builds so consistently, you often find a snap-back reversal — but no one really expects this in the rand, given what seems to be continued forex hedging needs and divestment.”

Traders are now watching whether the rand will fall to 19.3508, its record low if intraday prices are included.

The country’s local-currency bonds were among the worst performing emerging-market securities on Thursday. The yield on government debt due 2032 rose 33 basis points to 11.6%, the most in a day since Dec. 1, when Ramaphosa’s fate was in the balance amid the cash in couch scandal.

Bearish bets on the currency jumped by the most in over three years. The premium on one-month options to buy the rand over those to sell them, known as the 25 Delta risk reversal climbed to 2.6 percentage points, the highest since Dec. 5.

An index of South African banking stocks fell by the most this year as the rand extended its losses. Standard Bank Group, FirstRand and Absa Group fell at least 4% each. The sector index was down as much as 5.9%, the most since Dec. 1. The broader benchmark index fell a third consecutive day, heading for its lowest close in over a month.