The rand was still trading in quiet territory late Tuesday afternoon after experiencing a lacklustre day following a rally on Monday after new of the Spanish $125bn banking bailout.

The rand moved in a quiet six cents range on the day from a 20c to 30c range on Monday.

“Markets are just see-sawing after it digested the Spanish banks bailout news yesterday and will keep on treading water until this weekend’s Greek elections‚” Warrick Butler‚ head of rand trading at Standard Bank said.

No major international money flows into South African markets and hedge funds were seen today. A lot more volatility in the rand is expected going forward due to the nervousness caused by the uncertainty over the upcoming Greek June 17 elections which could result in an anti-bailout government taking charge‚ and the country leaving the eurozone‚ which would cause contagion effects.

At 15:42 the rand was bid at R8.4407 to the dollar from Monday’s close of R8.4625. It was bid at R10.5317 to the euro from its previous close of R10.5486 Monday and at R13.0982 against sterling from R13.0927 at its previous close. The euro was bid at US$1.2480 from Monday’s close of $1.2466.

Meanwhile Dow Jones Newswires reports that Polish Prime Minister Donald Tusk said Tuesday he thought Europe was mentally prepared for the worst case scenario of a Greek exit from the eurozone and that it was now up to the Greek people to take their fate in their own hands.

Meanwhile the eurozone debt crisis deepened as an ominous rise in Spanish government bond yields fanned speculation that the country might need a bailout of its own‚ just days after Spain sought a support package for its beleaguered banking system. US stock futures advance‚ buoyed by gains in European markets‚ but a cautious mood prevailed due to increasing worries about Spain's debt crisis.

Core eurozone countries may have to increase their spending to help more indebted countries to limit contagion effects were Greece to leave the euro‚ a senior director at Fitch said ahead of key Greek elections this weekend.

Dow Jones reports that a run of euro-bashing took a pause Tuesday in European trading‚ though pressure on Spanish and Italian government debt yields provided a stark reminder that investors are nonplussed with plans announced over the weekend to recapitalise Spain’s banks.

The single currency fell in early Asian trading hours‚ in a continuation of the drubbing it received Monday as investors questioned the details of the 100 billion euro ($125bn) deal aimed at strengthening the Spanish banking system. The move by Fitch Ratings to downgrade two large Spanish lenders‚ Banco Bilbao Vizcaya Argentaria and Banco Santander‚ by two notches to triple-B-plus late Monday further dented sentiment.

As European trading go underway‚ the euro recovered to climb back above $1.25 against the dollar‚ with traders pointing to strong euro-buying from the Middle East‚ but the pickup mostly reflected some exhaustion in momentum for negative bets‚ rather than a positive turn of events in the increasingly pressing euro crisis.

Bonds firm on Italian woes

 The South African bond market firmed in afternoon trade on Tuesday as investors sought safe havens.

At 15:52‚ the benchmark R157 bond was trading at 6.210 percent from Monday’s close of 6.230 percent and Friday’s close of 6.255 percent. The R207 was trading at 7.470 percent from a previous close of 7.505 percent and the R186 was trading at 8.280 percent from its close of 8.295 percent.

The rand was bid at R8.4376 against the dollar from a best level on Tuesday of R8.3699‚ Monday’s close of R8.4625 and Friday’s close of R8.3147.