The rand kept a softer bias against the US dollar in afternoon trade on Thursday in a relatively muted session‚ with the highly anticipated weekend Greek election capping market activity.

At 15:36 the rand was bid at R8.4317 to the dollar from Wednesday’s close of R8.3877. It was bid at R10.6008 to the euro from its previous close of R10.5442 and at R13.0900 against sterling from R13.0099 before.

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

“We are battling for direction at this stage. The players are not keen to jump into the markets heading into the Greek polls‚” said Lynden Reabow‚ FX sales trader at PSG Prime. “We have been trading in a fairly narrow band since yesterday and I expect the same sort of scenario to continue tomorrow.”

Standard Bank said in a note earlier today that risk aversion remained the order of the day ahead of the Greek election.

Meanwhile‚ the financial crisis threatening the Spanish government deepened on Thursday as its borrowing costs hit a new euro-era high‚ touching levels that previously forced other eurozone countries to seek sovereign debt bailouts‚ Dow Jones Newswires reported.

The move followed yet another sovereign credit downgrade and coincided with fresh evidence of economic and financial stress as the decline of Spanish housing prices accelerated to a 12.6 percent annual rate in the first quarter and Spanish banks increased their reliance on European Central Bank funding.

Curve steepening on rate cut hopes

Curve steepening continued in afternoon trade on Thursday on rate cut hopes.

“The short end is gaining from rate cut speculation‚ while the longer end is under pressure as a result of the switch auction‚” a local trader said.

At 16:00‚ the benchmark R157 bond was trading at 6.140 percent from Wednesday’s close of 6.170 percent. The R207 was trading at 7.470 percent from a previous close of 7.465 percent and the R186 was trading at 8.260 percent unchanged from its previous close.