South Africa's currency eyes record low after US accuses the country of secretly selling weapons to Russia

• The US accused South Africa of selling weapons and ammo to Russia.
• This has caused the rand to drop as much as 2.4% against the dollar.

The South African rand headed for a record low Thursday, after the US alleged that the country was supplying Russia with weapons.

The currency dropped as much as 2.4% against the dollar to 19.3413, representing a closing low and stretching this year's decline to 11.5%. The rand's all-time intraday low is 19.3508.

In comments reported by South Africa's News24, US Ambassador Reuben Brigety said the US is confident that a sanctioned Russian vessel, Lady R, was loaded with arms after docking near Cape Town last December, then made its way back to Russia.

"The arming of the Russians is extremely serious, and we do not consider this issue to be resolved," he said. "And we would like SA to [start] practising its non-alignment policy."

The the Lady R is owned by Transmorflot, which was sanctioned by the US last year, and appeared to switch off its transponder while stopping in Cape Town, according to the Financial Times.

South African President Cyril Ramaphosa's office tweeted that it would respond to the claim "in due course." In January, the South African government denied approving any arms sales from to Russia since Moscow launched its war on Ukraine last year.

The accusations add to scrutiny of Ramaphosa, who is seen as having close ties to the Kremlin. South Africa and Russia participated in joint naval exercises in February. Ramaphosa has also invited Russian President Vladimir Putin to the BRICS summit in Johannesburg this summer.

In addition to geopolitical tensions, power supply shortages and lackluster growth in Chinese markets have caused the rand to underperform, according to Bloomberg.

South Africa's energy crisis has lowered economic growth projections down to near-zero, and uncertain Chinese demand has impacted outlooks for South African exports.