The rand dropped over 2% against the US dollar in late trade on Thursday, in line with some other emerging market currencies.

"Emerging markets in general are in a spot of bother, with poor growth out of SA, political turmoil and other problems in the rest of the EM space," TreasuryOne head dealer Wichard Cilliers told Fin24.

He said the local unit has been struggling together with some other EM currencies, with Brazil's real also around 2% weaker.

"India also has its problems, with the rupee under pressure."

By 19:35 the rand was trading down 2.46% at R13.02 to the greenback as the US Federal Reserve looks set to proceed with its policy tightening, with another interest rate hike expected next week.

Several central banks have already started increasing interest rates to stem any further selloff.

Bloomberg reports that Bank Indonesia has already raised its key rate twice to help bolster its currency, while the Reserve Bank of India on Wednesday increased its policy rate by 25 basis points to 6.25%.

Cilliers added that Turkey raised interest rates again on Thursday in an attempt to stem losses on the currency front.

"Locally our bonds also also been fairly hard hit, with R186’s trading up to 8.69%. Foreigners have been big sellers in this space.

"All in all, there seems to be some selling of emerging markets across the board and the ZAR being very liquid is taking big strain," said Cilliers.

South African Reserve Bank governor Lesetja Kganyago said on Tuesday the Fed is communicating its intentions better than it did in 2013 during the taper tantrum, but its job is being complicated by US fiscal policy, Bloomberg reported.

“Nobody figured out that the US could embark on all of these trade policies that they had embarked on and that complicates the work of the Fed,” he said in Johannesburg.

“I don’t think that they had factored in earlier that there will be stimulus that had been put in for the US economy from the fiscus.”

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