Watch out all you Rand Bulls – the second rating shoe is about to drop

Those who understand the brain best tell us we need to pay attention to intuition. Especially left-brain dominated analytical types. Intuition is how the right side of our brains communicates with us. It often sends the best signals.

With this in mind, I asked a pal who has spent a lifetime trading markets for a view on the Rand, especially against the British Pound, a currency which many pundits have tipped as the most undervalued on earth. His response came straight from the right brain – R23 to the Pound didn’t feel right; but neither does R16.60 (where it currently trades).

In other words, the Rand’s strength is likely to be temporary. His intuition is supported by something many analysts are overlooking. Ratings agencies have consistently warned the downgrading of SA’s domestic debt will be weighed against both political factors AND economic growth. This week, the second one turned negative with a shock second quarter of GDP contraction.

We’ve been warned.

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