The Nigerian Foreign Exchange Market and the Volatile Naira
The Central Bank of Nigeria (CBN) announced on January 31 that it has eliminated the caps on naira exchange rates for international money transfer operators (IMTOs). This policy change aims to further liberalize the foreign exchange market and provide more flexibility in determining naira payout rates.
Previously, IMTOs were required to quote rates that did not exceed the previous day's exchange rate by more than 2.5%. However, with the removal of this restriction, IMTOs are now allowed to provide payout rates based on the prevailing exchange rate.
The CBN's decision comes as discussions continue regarding the stability of the naira and its value in the official foreign exchange market. The implementation of upper and lower caps was initially intended to mitigate the risk of rapid depreciation of the naira. However, this restriction led to an increase in dollars being traded on the parallel market, resulting in a wider gap between the parallel and official market exchange rates.
Recent reports indicate that the removal of the caps on naira payout rates has already had positive effects. On February 1, the naira experienced a significant gain of over 8% against the dollar. Analysts suggest that this surge may be directly attributed to the policy change by the central bank. It is worth noting that this recovery occurred amidst reports of licensed foreign exchange dealers planning to halt their operations.
Frequently Asked Questions
Is it possible to hold precious metals in an IRA
This depends on the IRA's owner's desire to diversify or keep his holdings in silver and gold.
He can choose to diversify if he so desires. He could either buy bars of physical gold and/or sterling from a dealer or simply sell these items back at the end. Imagine he doesn't desire to sell off his precious metals investments. In that case, he should continue holding onto them as they would be perfectly suitable for storing within an IRA account.
Can I place gold in my IRA account?
The answer is yes! You can include gold in your retirement plan. Gold is a great investment as it doesn't lose money over time. It is also immune to inflation. It is also exempt from taxes.
Before you invest in gold, make sure to understand its differences from other investments. You can't purchase shares in gold companies, unlike stocks and bonds. You cannot also sell them.
Instead, you must convert your gold to cash. This means that it will be necessary to dispose of the gold. You cannot just keep it.
This is what makes gold unique from other investments. With other investments, you can always sell them later. With gold, this isn't true.
Even worse, gold cannot be used to secure loans. If you get a mortgage, for example, you might have to give up some of the gold you own in order to pay off the loan.
What does that mean? You can't keep your gold indefinitely. You will have to sell it at some point.
You don't need to worry. You only need to open an IRA account. Then you can invest your money in gold.
Is it a good idea to have an IRA that holds gold and silver?
This could be a good option for anyone looking to quickly invest in both silver or gold. There are other options as well. Contact us anytime if you have questions about these types investment options. We're always happy to help!
Which is stronger: 14k gold or sterling silver?
Both gold and silver make strong metals. Sterling silver is more affordable than sterling silver which has only 24% pure silver.
Sterling silver is sometimes called fine silver. This is because it is made with a mix of silver and different metals like copper or zinc.
Gold is considered very strong. It takes great pressure to break it apart. If you were to drop an object on top of a piece of gold, it would shatter into thousands of pieces instead of breaking into two halves.
On the other hand, silver is not nearly as strong as gold. A sheet of silver would likely bend and fold if you dropped an item on it.
Silver is often used to make jewelry and coins. The price of silver can fluctuate according to supply and demande.
- You can only purchase gold bars of at least 99.5% purity. (forbes.com)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal so that 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)
- Same tax rules as traditional IRA SEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less Before setting up a Silver IRA, understand the fees and IRS restrictions. (sltrib.com)
- The IRS also allows American Eagle coins, even though they do not meet gold's 99.5% purity standard. (forbes.com)
- Gold IRA: Add some sparkle to your retirement nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
How to Open a Precious Metal IRA
Precious Metals are one of today's most desired investment vehicles. Precious metals are a popular investment option because they provide investors with higher returns than traditional bonds and stocks. However, you need to be careful when investing in precious materials. Here are the basics to help you open your precious metal IRA account.
There are two main types of precious metal accounts: physical precious metals accounts and paper gold and silver certificates (GSCs). Each type comes with its own set of advantages and disadvantages. GSCs can be traded and access physical precious metals accounts, which offer diversification benefits. Continue reading to learn more about each of these options.
Physical precious metals accounts consist of coins, bars, and bullion. This option offers diversification benefits but also has some drawbacks. For instance, the costs associated with buying, storing, and selling precious physical metals are quite expensive. Due to their size, it can be difficult for them to be transported from one place to another.
Paper gold and silver certificates, on the other hand are very affordable. These certificates can also be traded online, and they are easy to access. They are ideal for those who don't wish to invest in precious metals. But they don't offer as much diversification as their physical counterparts. Also, since they're backed by government agencies such as the U.S. Mint, the value of these assets could decrease if inflation rates rise.
Make sure you choose the right account to suit your financial situation when opening a precious Metal IRA. Before doing so, consider the following factors:
- Your tolerance level
- Your preferred asset allocation strategy
- How much time will you invest?
- You can decide whether or not to use the funds for trading purposes.
- Which type of tax treatment would you prefer
- Which precious metals would you prefer to invest in
- How liquid should your portfolio be?
- Your retirement age
- Where to store precious metals
- Your income level
- Current savings rate
- Your future goals
- Your net worth
- Any special circumstances that may affect your decision
- Your overall financial position
- Preference between paper and physical assets
- Your willingness and ability to take risks
- Your ability manage losses
- Your budget constraints
- You desire to be financially independent
- Your investment experience
- Precious metals are familiar to you
- Your knowledge of precious metals
- Your confidence in the economy
- Your personal preferences
Once you have decided which type of precious-metal IRA is best for you, it's time to open an account at a reputable dealer. These companies are often found by word of mouth referrals or online research.
Once your precious metal IRA has been opened, you'll need decide how much money you wish to invest. There are different minimum deposits for precious metal IRA accounts. Some accounts will only accept $100, others will allow for you to invest as high as $50,000.
As stated above, the amount of money invested in your precious metal IRA is completely up to you. A higher initial deposit will help you build wealth over a prolonged period. On the other hand, if you're planning on investing smaller sums of money every month, a lower initial deposit might work better for you.
You have many options when it comes to the type of investments you can make. The most common include:
- Bullion bars, rounds and coins in gold – Gold
- Silver – Rounds or coins
- Platinum – Coins
- Palladium – Bar and round forms
- Mercury – Round and bar forms
By: Terence Zimwara
Title: The Central Bank of Nigeria Removes Caps on Naira Payout Rates
Sourced From: news.bitcoin.com/nigeria-forex-crisis-central-bank-removes-cap-on-exchange-rate-for-international-money-transfer-operators/
Published Date: Sun, 04 Feb 2024 09:30:29 +0000