Graphic: renjith krishnan

The rand was weaker in midday trade on Thursday‚ losing steam on the back of a weaker euro.

“Not a lot is happening in the local markets with everybody waiting for the outcome of the Greek elections on Sunday night. Monday will be a big day for the rand‚” Jan Defouw‚ rand trader at Standard Bank said.

At 11:41 the rand was bid at R8.8.4329 to the dollar from Wednesday’s close of R8.3877. It was bid at R10.5804 to the euro from its previous close of R10.5442 and at R13.0554 against sterling from R13.0099 before.

The euro was bid at US$1.2548 from Wednesday’s close of $1.2570.

Standard Bank said in a note earlier today that risk aversion remained the order of the day ahead of the highly anticipated Greek election. The rand moved largely sideways yesterday as disappointing local retail sales data‚ which initially weighed on the currency‚ was partially buffered by equally disappointing US sales data which re-ignited speculation on further quantitative easing from the US Fed.

Concern over Greece and the question of whether further quantitative easing was in the offing seemed the main driving forces on the day. However‚ with the Greek election on June 17‚ market participants appeared to favour the sidelines.

“We therefore do not expect any major currency moves into the weekend. Nevertheless‚ given our expectation of a positive outcome in the Greek elections‚ we foresee a renewed risk-on mood next week and‚ with it‚ the potential for the rand to regain some ground in the short term before once again succumbing to its longer-term weakening bias‚” the bank said.

Meanwhile Eurozone problems were still in full swung with Moody’s downgrading Spain by three levels to Baa3‚ one step away from junk. Greeks were also withdrawing their cash from banks‚ with withdrawals of EUR800m per day.

Dow Jones Newswires reported that Asian markets fell on Thursday as concerns about the ability of European countries to borrow added to lingering concerns about Greek elections this weekend.

Many investors “are waiting to see the key Greek elections Sunday and any potential policy measures to be taken next week‚” said Kazuhiro Takahashi‚ general manager of investment strategy in Daiwa Securities.

Fears about the health of Spain's financial system were prominent‚ after Moody's Investors Service downgraded Spain by three notches-to Baa3‚ just one level above junk. The ratings firm said the EUR100 billion ($126bn) Spanish bank bailout would worsen the government's debt position and that the European country's current reliance on external funding was unsustainable. - I-Net Bridge