"ugly, unattractive" (originally of women), by 1965, African-American vernacular; see skank + -y (1).
Entries linking to skanky
skank n.
"unattractive woman," 1965, perhaps from skag in this sense (1920s), which is of unknown origin.
The verb meaning "dance to reggae music" is from 1976, probably not the same word but also of unknown origin. Related: Skanking.
-y 1
noun suffix, in army, city, country, etc., from Old French -e, Latin -atus, -atum, past participle suffix of certain verbs, which in French came to be used to indicate "employment, office, dignity" (as in duché, clergié).