The rand, which was trading close to R18.70/$ less than a week ago, was below R18.26 on Tuesday morning.
The greenback rose to an intraday peak of 134.03 yen and was last 0.48% higher at 133.87, reversing some of Monday's 1.4% slide. The collapse of SVB - the largest bank failure since the 2008 financial crisis - has raised questions about whether the Fed's aggressive rate increases have exposed cracks among key players within one of the world's largest and most heavily interconnected banking sectors.
"And that argument applies not just to the U.S., but around the globe ... Regardless of the fact that the authorities in the U.S. have provided that security assurance that depositors will be ok, investors don't know if they're going to be ok, and therefore they're running for the door." The Fed's rate hikes and expectations of how much higher U.S. rates would go have been a huge driver of the dollar's rally.
A key U.S. inflation report is due later on Tuesday, which could add to the Fed's conundrum on whether it should stay on its rate-hike path to tame persistent price pressures, or to hold back on tightening monetary policy further to give the banking system some breathing space.