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Cape Town - The rand raced to R11.79/$ after the ANC announced at a media briefing on Wednesday afternoon that the ruling party will vote on a motion of no confidence against President Jacob Zuma.
This is its highest rate since mid-May 2015.
The vote will take place in Parliament on Thursday, if Zuma doesn't heed the ANC's call to resign before then. It comes after the president failed to address the nation on the matter of his resignation, after he was recalled by the ANC's highest decision-making body on Tuesday.
Zuma was set to address South Africans at 10:00 on Wednesday, but this did not happen. His office later said that "no official communication has been issued".
Before news on the motion of no confidence was reported, the rand was trading on an intraweek high of R11.83 to the dollar. It closed the overnight session at R11.96 to the greenback.
Gupta raids
Earlier on Wednesday, News24 reported that the Hawks have arrested three people, reportedly including one of the Gupta brothers, in raids carried out in the morning.
Political analyst Daniel Silke said the raids indicated that "the long arm of the law has been released to act".
"While it may well be coincidental that the swoop on the Gupta's compound - and even possible arrest of a Gupta brother - occurs on a day in which President Zuma is slated to step down, these actions will heap further pressure on the president," he said.
"They further erode the house of cards that has formed around the nexus between the president, senior leaders of the ANC and the Guptas."
Wichard Cilliers, a currency dealer at TreasuryONE, told Fin24 on Wednesday morning that investors are waiting to see how the last days of Zuma's presidency would play out.
"We expect the ZAR to test the R11.80/$ level if the president does resign, but the longer the saga drags on the more difficult it will become for the ZAR to gain ground," Cilliers said earlier.
He also said reports that the Hawks have carried out raids connected to the Gupta family continue "to send out the signal that SA Inc is on the right path to really fight corruption".
Zexit already priced in
Bianca Botes of Peregrine Treasury Solutions said she expects the rand to trade below the R12.00/$ level over the short term, on the back of a rebound in emerging market stocks and positive sentiment over Zuma's recall.
She said one reason the rand didn't react much to Tuesday's announcement by ANC secretary general Ace Magashule that the party was recalling Zuma was because the president's removal had already been priced into the rand's level "for over a week".
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