Initially hit by softening demand for emerging market assets as global bond yields picked up, the rand's losses accelerated to a session-low 12.55 shortly after the ANC Secretary-General Ace Magashule told reporters Zuma's removal was not on the agenda of a meeting of the party's top decision-making body.

At 1100 GMT the rand was 1.4 percent weaker at 12.5075 per dollar, slightly better than the slide to its weakest level since Dec. 26.

The rand has swung between 12.2275 and the upper 12.50s for the first two weeks of the year, pushed and pulled by mostly rumour-fuelled bets of a Zuma resignation before his term ends in 2019.

"The rand, and markets generally, at the moment have been very headline driven. And the ANC meeting only ends on Friday so there will be more headlines and that means rand volatility should continue," said trader at RMB Jim Bryson.

"It's really difficult to call, it needs to close above 12.52 to get out of these ranges, but a test of around 12.20 cannot be totally discounted," Bryson said.

The rand has rallied since mid-December, supported by investors' hopes that the newly elected leader ANC head Cyril Ramaphosa would push through business-friendly policies.

The rally has since stalled, with signs of higher rates in the United States shifting some of the focus back to fundamentals, although analysts said a decision on Zuma remained the main swing factor.

"He (Ramaphosa) is likely to do everything in his power to reduce Zuma's influence and to facilitate a rapid end to his time in power. That is rand positive," said analyst at Frankfurt-based Commerzbank Elisabeth Andreae.

Bonds tracked the weaker currency, with yield on the benchmark paper due in 2026 up 4.5 basis points to 8.63 percent.

In equities, the benchmark Top-40 index slipped 0.11 percent to 53,126 points while the All-Share index declined 0.22 percent to 59,980 points.

Troubled South African group Steinhoff was on course for a three-day losing streak, weakening 3.58 percent to 7.28 rand as the retailer scrambled to plug short-term funding gap.

The retailer needs 200 million euro ($238 million) to meet obligations in the next few days and avoid default by its smaller units, like Austrian Kika-Leiner, pulling down the entire entity, sources close to the negotiations told Reuters.