Egypt's Central Bank Aims to Alleviate Pressure on Forex Reserves
The Central Bank of Egypt (CBE) is taking further steps to stabilize the country's economy by auctioning dollar-denominated treasury bills (TB) worth $1 billion. This move comes as part of the ongoing efforts to alleviate pressure on Egypt's foreign exchange reserves.
Challenges Faced by the Egyptian Pound
Despite previous measures taken by the CBE, the Egyptian pound continues to face challenges. In an attempt to curb inflation and stabilize the economy, the CBE recently raised overnight interest rates by 200 basis points. This resulted in the lending rate reaching 22.25% and the deposit rate reaching 21.25%. The decline in Egypt's headline inflation rate to 33.7% indicates some level of success in the CBE's efforts.
The pound's parallel market exchange rate against the US dollar briefly reached a record low of EGP75 for every dollar, as reported by Xhinua. However, the official exchange rate remains at EGP31:USD1.
Impact of Funding Agreement with the IMF
The recent news of a funding agreement between Egypt and the International Monetary Fund (IMF) has sparked hope and contributed to the pound's resurgence. Reports suggest that Egypt and the IMF have agreed to expand the scope of the country's program from $3 billion to $10 billion. This development has led to a nearly 40% gain in the pound's value against the dollar, according to a report by Alarabiya News.
However, critics like Steve Hanke, a professor at Johns Hopkins University, remain skeptical about Egypt's economic prospects. Hanke highlights Egypt's high inflation rate, which he estimates to be at 139%, and the country's high debt as reasons for his concerns.
In conclusion, the CBE's auction of dollar-denominated treasury bills aims to ease pressure on Egypt's foreign exchange reserves and stabilize the economy. While the funding agreement with the IMF has brought some hope, challenges such as inflation and high debt still pose obstacles to Egypt's economic recovery.
Frequently Asked Questions
What is the best precious-metal to invest?
The answer to this question depends on how much risk you are willing to take and what type of return you want. Gold is a traditional haven investment. However, it is not always the most profitable. You might not want to invest in gold if you're looking for quick returns. If you have time and patience, you should consider investing in silver instead.
Gold is the best investment if you aren't looking to get rich quick. Silver might be a better investment option if steady returns are desired over a long period of time.
Should You Invest in Gold for Retirement?
It depends on how much you have saved and if gold was available at the time you started saving. If you're unsure about which option to choose then consider investing in both.
You can earn potential returns on your investment of gold. It is a good choice for retirees.
Most investments have fixed returns, but gold's volatility is what makes it unique. Because of this, gold's value can fluctuate over time.
However, it doesn't necessarily mean that you shouldn't invest your money in gold. It just means that you need to factor in fluctuations to your overall portfolio.
Another advantage of gold is its tangible nature. Unlike stocks and bonds, gold is easier to store. It is also easily portable.
Your gold will always be accessible as long you keep it in a safe place. Additionally, physical gold does not require 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.
A portion of your savings can be invested in something that doesn't go down in value. When the stock market drops, gold usually rises instead.
Another advantage to investing in gold is the ability to sell it whenever you wish. You can easily liquidate your investment, just as with stocks. You don't have to wait for retirement.
If you do decide to invest in gold, make sure to diversify your holdings. Do not put all your eggs in one basket.
You shouldn't buy too little at once. Start small, buying only a few ounces. You can add more as you need.
The goal is not to become rich quick. Instead, the goal here is to build enough wealth to not need to rely upon Social Security benefits.
Gold may not be the most attractive investment, but it could be a great complement to any retirement strategy.
How Do You Make a Withdrawal from a Precious Metal IRA?
First, you must decide if you wish to withdraw money from your IRA account. You should also ensure that you have enough money to cover any fees and penalties associated with withdrawing funds.
A taxable brokerage account is a better option than an IRA if you are prepared to pay a penalty for early withdrawals. This option is also available if you are willing to pay taxes on the amount you withdraw.
Next, calculate how much money your IRA will allow you to withdraw. This calculation will depend on many factors including your age at the time of withdrawal, how long the account has been in your possession, and whether you plan to continue contributing towards your retirement plan.
Once you have determined the percentage of your total savings that you would like to convert to cash, you can then decide which type of IRA to use. Traditional IRAs allow for you to withdraw funds without tax when you turn 59 1/2. Roth IRAs, on the other hand, charge income taxes upfront but you can access your earnings later and pay no additional taxes.
Once these calculations have been completed you will need to open an account with a brokerage. Many brokers offer signup bonuses or other promotions to encourage people to open accounts. It is better to open an account with a debit than a creditcard in order to avoid any 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 facilities will take bullion bars while others require you only to purchase individual coins. Either way, you'll need to weigh the pros and cons of each before choosing one.
Bullion bars, for example, require less space as you're not dealing with individual coins. However, each coin will need to be counted individually. On the flip side, storing individual coins allows you to easily track their value.
Some prefer to keep their money 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.
What Should Your IRA Include in Precious Metals?
When investing in precious metals, the most important thing to know is that they aren't just for wealthy people. It doesn't matter how rich you are to invest in precious metals. In fact, there are many ways to make money from gold and silver investments without spending much money.
You might consider purchasing physical coins, such as bullion bars and rounds. You could also buy shares in companies that produce precious metals. You might also want to use an IRA rollover program offered through your retirement plan provider.
No matter what your preference, precious metals will still be of benefit to you. They offer the potential for long-term, sustainable growth even though they aren’t stocks.
And, unlike traditional investments, their prices tend to rise over time. If you decide to sell your investment, you will likely make more than with traditional investments.
How much money should my Roth IRA be funded?
Roth IRAs let you save tax on retirement by allowing you to deposit your own money. These accounts cannot be withdrawn until you turn 59 1/2. There are some rules that you need to keep in mind if you want to withdraw funds from these accounts before you reach 59 1/2. First, you can't touch your principal (the initial amount that was deposited). This means that regardless of how much you contribute to an account, you cannot take out any more than you initially contributed. If you wish to withdraw more than you originally contributed, you will have to pay taxes.
The second rule is that you cannot withdraw your earnings without paying income taxes. Also, taxes will be due on any earnings you take. Let's take, for example, $5,000 in annual Roth IRA contributions. Let's say you earn $10,000 each year after contributing. Federal income taxes would apply to the earnings. You would be responsible for $3500 The remaining $6,500 is yours. This is the maximum amount you can withdraw because you are limited to what you initially contributed.
The $4,000 you take out of your earnings would be subject to taxes. You'd still owe $1,500 in taxes. You'd also lose half the earnings that you took out, as they would be subject to a second 50% tax (half of 40%). So, even though you ended up with $7,000 in your Roth IRA, you only got back $4,000.
There are two types of Roth IRAs: Traditional and Roth. Traditional IRAs allow for pre-tax deductions from your taxable earnings. When you retire, you can use your traditional IRA to withdraw your contribution balance plus interest. You can withdraw as much as you want from a traditional IRA.
Roth IRAs are not allowed to allow you deductions for contributions. After you have retired, the full amount of your contributions and accrued interest can be withdrawn. There is no minimum withdrawal required, unlike a traditional IRA. You don’t have to wait for your turn 70 1/2 years before you can withdraw your contributions.
Statistics
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (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)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
External Links
law.cornell.edu
- 7 U.S. Code SS 7 – Designation of boards of trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement accounts
irs.gov
wsj.com
- Saddam Hussein's Invasion Helped Uncage a Bear In 1990 – WSJ
- You want to keep gold in your IRA at home? It's Not Exactly Legal – WSJ
finance.yahoo.com
How To
Online buying gold and silver is the best way to purchase it.
Understanding how gold works is essential before you buy it. Gold is a precious metal similar to platinum. Because of its resistance to corrosion and durability, it is very rare. It is hard to use, so most people prefer jewelry made of it to real bars of gold.
There are two types today of gold coins. One is legal tender while the other is bullion. Legal tender coins are designed for circulation in a country. They often have denominations like $1 or $5 or $10.
Bullion coins should only be used for investment purposes. Inflation can cause their value to increase.
They aren’t exchangeable in any currency exchange. For example, a person who buys $100 worth or gold gets 100 grams. This gold has a $100 price. Each dollar spent earns the buyer 1 gram gold.
When looking to buy precious metals, the next thing you should be aware of is where it can be purchased. There are several options available if your goal is to purchase gold from a dealer. First, your local currency shop is a good place to start. You can also go to a reputable website such as eBay. You might also consider buying gold from an online private seller.
Individuals who sell gold at wholesale and retail prices are called private sellers. Private sellers will charge you a 10% to 15% commission for every transaction. That means you would get back less money from a private seller than from a coin shop or eBay. However, this option is often a great choice when investing in gold since it gives you more control over the item's price.
Another option for buying gold is to invest in physical gold. Physical gold is much easier to store than paper certificates, but you still have to worry about storing it safely. To ensure that your physical gold remains safe, you need to secure it in an impenetrable container such as a vault or safety deposit box.
If you are looking to purchase gold on your own, you have two options: a bank or an pawnshop. A bank can give you a loan up to the amount you intend to invest in Gold. Customers can borrow money from pawnshops to purchase items. Banks tend to charge higher interest rates, while pawnshops are typically lower.
You can also ask for help to purchase gold. Selling gold is simple too. A company such as GoldMoney.com can help you set up a simple bank account and get paid immediately.
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By: Terence Zimwara
Title: Egypt's Efforts to Stabilize Economy with $1 Billion Treasury Bill Auction
Sourced From: news.bitcoin.com/egypt-aims-to-ease-pressure-on-forex-reserves-via-1-billion-treasury-bill-auction/
Published Date: Tue, 06 Feb 2024 10:00:57 +0000
