A strike at the world's biggest three platinum producers also intensified concerns about the economy, which has struggled to post strong growth since exiting a recession in 2009.
Lack of a breakthrough in wage negotiations coupled with the general global downturn in risk appetite helped push the rand nearly 1.5% weaker to R11.2550/$ in Monday's session, its softest since late 2008.
It clawed its way back to R11.1560/$ by 15:16 GMT, still down 0.6% from Friday's close in New York.
Government debt was also heavily sold, with the yield for the secondary benchmark bond maturing in 2026 jumping as much as 15.5 basis points to a two-year high of 8.72%. It settled back to end the day at 8.675%.
The yield for the shorter-dated instrument due in 2015 hit a high of 6.61% before coming back to close 10.5 basis point higher at 6.575%.
"The rand is trading badly again and there's a general emerging market sell-off so there's a bit of contagion that's affecting everything," said Mark Southworth, a bond trader at Citi.
"Any economies with weak fundamentals and twin deficits are getting hit hard. It's an extension of the 'fragile five' phenomenon and Turkey and South Africa are getting punished."
South Africa's reliance on external capital flows to plug a current account deficit of nearly 7% of GDP has earned it a place among the so-called fragile five major emerging economies that also include Turkey, Brazil, Indonesia and India.
The sharp fall in the rand poses a risk to inflation, with some analysts expecting this to force the central bank to start raising interest rates as early as this year despite lacklustre economic growth.
On Monday, forward rate agreements suggested the short term interest rate market was pricing in a small chance of a rate hike at the bank's first policy meeting of the year this week, with a 50 basis point hike more than likely in May.