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"unattractive woman," 1965, perhaps from skag in this sense (1920s), of unknown origin. Verbal meaning "dance to reggae music" is 1976, probably not the same word, but also of unknown origin. Related: Skanking.
To do a sort of reggae dancing in which the body bends forward, the knees are raised, and the hands claw the air: They move in sympathetic response to the music, skankin' from side to side/ They mosh. They slam. They skank and thrash, too (1976+)