Experts in Nigerian economy say that the five-year-old agreement between Nigeria and China on currency swaps has not helped to ease the pressure on the Nigerian currency. According to an expert, the large trade deficit between Nigeria and China is holding back the implementation of the currency swap agreement.
Reduce the pressure on the Naira
Experts on Nigerian economics say that the five-year-old currency exchange agreement between Nigeria and China has not been able to reduce the pressure on the Nigerian naira. The agreement, signed between the Central Bank of Nigeria and the People's Bank of China, was intended to ease pressure on Nigeria's reserves and ensure stability of foreign exchange.
Since the signing of the swap agreement in 2018, however, the Nigerian currency depreciated against the dollar. From N305:$1 to N460:$1 by the first week in April 2023. The exchange rate for the Nigerian currency against the yuan fell from N48:CNY1 in 2018 to N66.70 CNY1 on 6 April 2023. The naira/dollar rate was reported to be over N730 per $1 on the parallel foreign exchange market. This is a major source of greenbacks for Nigerian individuals and businesses.
The failure of the currency exchange arrangement came as several countries were attempting to or have established similar arrangements with China.
Taiwo Oyedele of PWC Nigeria's tax and corporate advisory service pointed out that the trade imbalance between China and Nigeria is the reason why the currency exchange arrangement seems to be failing to stop the naira from declining.
"The implementation of the agreement has been difficult so far due to the imbalance in trade between Nigeria and China. "We import a lot from China but export a fraction of that amount, and this has actually been declining, in addition to relative instability in the naira's value," Oyedele said.
Oyedele believes that Nigeria can remedy the situation by substituting locally produced products for imports or by promoting them.
What do you think about this story? Comment below and let us know your thoughts.
Frequently Asked Questions
Should You Get Gold?
Gold was once considered an investment safe haven during times of economic crisis. Many people today are moving away from stocks and bonds to look at precious metals, such as gold, as a way to diversify their investments.
Gold prices have been on an upward trend over recent years, but they remain relatively low compared to other commodities such as oil and silver.
This could be changing, according to some experts. Experts predict that gold prices will rise sharply in the wake of another global financial collapse.
They also note that gold is increasingly popular because of its perceived intrinsic value and potential return.
These are some things you should consider when considering gold investing.
- Consider first whether you will need the money to save for retirement. It’s possible to save for retirement without putting your savings into gold. That said, gold does provide an additional layer of protection when you reach retirement age.
- Second, you need to be clear about what you are buying before you decide to buy gold. Each type offers varying levels and levels of security.
- Last but not least, gold doesn’t provide the same level security as a savings account. It is possible to lose your gold coins.
Do your research before you buy gold. And if you already own gold, ensure you’re doing everything possible to protect it.
How do you withdraw from an IRA that holds precious metals?
First, determine if you would like to withdraw money directly from an IRA. Make sure you have enough cash in your account to cover any fees, penalties, or charges that may be associated with withdrawing money from an IRA.
An IRA is not the best option if you don’t mind paying a penalty for early withdrawal. Instead, open a taxable brokerage. This option is also available if you are willing to pay taxes on the amount you withdraw.
Next, you’ll need to figure out how much money you will take out of your IRA. The calculation is influenced by several factors such as your age at withdrawal, the length of time you have owned the account and whether or not you plan to continue contributing to retirement plans.
Once you determine the percentage of your total saved money you want to convert into cash, then you need to choose which type IRA you will use. Traditional IRAs let you withdraw money tax-free after you turn 59 1/2, while Roth IRAs require you to pay income taxes upfront but allow you access the earnings later without paying any additional taxes.
Once you have completed these calculations, you need to open your brokerage account. Brokers often offer promotional offers and signup bonuses to encourage people into opening accounts. However, a debit card is better than a card. This will save you unnecessary fees.
When you finally get around to making withdrawals from your precious metal IRA, you’ll need a safe place where you can store your coins. Some storage areas will accept bullion, while others require you to purchase individual coins. Before choosing one, consider the pros and disadvantages of each.
Because you don’t have to store individual coins, bullion bars take up less space than other items. However, you’ll need to count every coin individually. However, keeping individual coins in a separate place allows you to easily track their values.
Some people prefer to keep coins safe in a vault. Some people prefer to store their coins safely in a vault. Regardless of the method you prefer, ensure that your bullion is safe so that you can continue to enjoy its benefits for many years.
Should You Invest Gold in Retirement?
How much money you have saved, and whether or not gold was an option when you first started saving will determine the answer. If you are unsure of which option to invest in, consider both.
Not only is it a safe investment but gold can also provide potential returns. Retirees will find it an attractive investment.
While most investments offer fixed rates of return, gold tends to fluctuate. Therefore, its value is subject to change over time.
However, it doesn’t necessarily mean that you shouldn’t invest your money in gold. You should just factor the fluctuations into any overall portfolio.
Another benefit to gold? It’s a tangible asset. Gold is much easier to store than bonds and stocks. It can also be carried.
You can always access gold as long your place it safe. Physical gold is not subject to storage fees.
Investing in gold can help protect against inflation. It’s a great way to hedge against rising prices, as gold prices tend to increase along with other commodities.
You’ll also benefit from having a portion of your savings invested in something that isn’t going down in value. Gold usually rises when the stock market falls.
Another advantage to investing in gold is the ability to sell it whenever you wish. Just like stocks, you can liquidate your position whenever you need cash. You don’t even have to wait until you retire.
If you do decide to invest in gold, make sure to diversify your holdings. Do not put all your eggs in one basket.
Also, don’t buy too much at once. Start with a few ounces. Then add more as needed.
The goal is not to become rich quick. It is to create enough wealth that you no longer have to depend on Social Security.
Even though gold is not the best investment, it could be an excellent addition to any retirement plan.
What is the tax on gold in an IRA
The fair market value at the time of sale is what determines how much tax you pay on gold sales. If you buy gold, there are no taxes. It’s not considered income. If you sell it later, you’ll have a taxable gain if the price goes up.
As collateral for loans, gold is possible. Lenders look for the highest return when you borrow against assets. For gold, this means selling it. There’s no guarantee that the lender will do this. They might keep it. Or they might decide to resell it themselves. You lose potential profits in either case.
In order to avoid losing your money, only lend against your precious metal if you plan to use it to secure other collateral. If you don’t plan to use it as collateral, it is better to let it be.
What is a Precious Metal IRA, and how can you get one?
A precious metal IRA allows for you to diversify your retirement savings in gold, silver, palladium and iridium. These are “precious metals” because they are hard to find, and therefore very valuable. These metals are great investments and can help protect your financial future from economic instability and inflation.
Precious metals often refer to themselves as “bullion.” Bullion is the physical metal.
Bullion can be bought through many channels, including online retailers, large coins dealers, and some grocery shops.
You can invest directly in bullion with a precious metal IRA instead of buying shares of stock. This means you’ll receive dividends every year.
Precious Metal IRAs don’t require paperwork nor have annual fees. Instead, you only pay a small percentage on your gains. You also have unlimited access to your funds whenever and wherever you wish.
Statistics
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item’s value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
