You got caught in the rain with no umbrella on your way to work, so you're totally wet. A coworker sees you and says:
You're soaking wet!
"Soaking wet" is a common phrase that means that something is very wet:
When he got home from the game, his shirt was soaking wet with sweat.
You can also say that a person is "soaking wet":
By the time I got to the interview, I was soaking wet.
To "soak" means to become filled with water, so this phrase is an exaggeration that compares the wet person to a sponge or something that's completely full of water.
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