Graphic: renjith krishnan

The volatile rand consolidated but remained range-bound in midday trade‚ tracking global markets‚ awaiting the much anticipated Greek election‚ which is expected to usher in new hope for the debt ridden eurozone.

“Basically there is a consolidation but the market remains very cautious. The rand remains range-bound in trade. There is massive risk around the euro; the overall sentiment will be determined the Greek elections on Sunday‚” a local trader said.

At 11:32 the rand was bid at R8.3807 to the dollar from Tuesday’s close of R8.3841. It was bid at R10.5132 to the euro from its previous close of R10.4950 and at R13.0512 against sterling from R13.0599 before. The euro was bid at US$1.2544 from Tuesday’s close of $1.2513.

Meanwhile Dow Jones Newswires reported that Spanish Prime Minister Mariano Rajoy on Wednesday defended the country's request for EUR100 billion ($125 billion) in aid for its ailing banks‚ a step he had long rejected as unnecessary.

Fielding questions from his opponents in parliament for the first time since the government was forced to accept the massive loan from the European Union to overhaul the financial sector‚ Rajoy blamed the previous socialist government for failing to act swiftly in previous years to address the impact of a property bubble burst on the country's financial sector.

Finance Minister Luis de Guindos‚ in turn‚ told legislators that had Spain injected money into its banks three years ago‚ “we would be singing another song”.

Rajoy said the government had been forced to ask for the EU loan as Spain did not have the resources to rescue ailing lenders on its own.

“Spain failed to overhaul the banking system in 2009‚” Rajoy told legislators‚ as such his government now had to focus on the reform of the local financial sector with EU funds‚ he added.

Doubts over the deal surfaced in parliament on Wednesday‚ putting pressure on Rajoy to persuade Spaniards that this plea for external assistance would help improve a dire economic situation.

By agreeing to ask for external assistance to clean up a banking industry strained by a massive housing bust‚ Spain will become the fourth eurozone country to request an EU bailout after Greece‚ Portugal and Ireland. The aid for Spain‚ however‚ has exacerbated investor doubts about the ability of European policymakers to bring the eurozone's long-running debt crisis under control. These worries sent Spanish borrowing costs‚ as measured by the 10-year government bond‚ to a euro-era high of 6.72% at Tuesday's close‚ up from 6.52% on Monday.

Although the EU aid will be channeled through the government‚ the financial industry will foot the bill‚ Rajoy said. Conditions attached to the loan will focus on the restructuring of the banking sector and won't affect society‚ he added.

Rajoy said implementing structural reforms and lowering the budget deficit remained the government's top goals‚ and that Spain's crisis is linked to broader problems in the euro area. - I-Net Bridge