The Central Bank of Nigeria (CBN) made an important announcement on January 31, stating that it has eliminated the caps on naira payout rates for international money transfer operators (IMTOs). This policy change is part of the CBN's efforts to further liberalize the foreign exchange market. As a result of this decision, the naira experienced a significant gain against major currencies on February 1, which has been attributed to the removal of the "allowable limits" by the CBN.
Prior to this policy adjustment, IMTOs were required to quote exchange rates that did not exceed the previous day's rate by more than 2.5%. However, the CBN's new policy supersedes a circular issued on September 13, 2023, and allows IMTOs to provide naira payout rates based on the prevailing exchange rate. This decision by the central bank is in response to ongoing discussions about the stability and value of the naira in the official foreign exchange market.
Initially, the caps on naira exchange rates were implemented as a precautionary measure to mitigate the risk of rapid depreciation of the currency. However, instead of achieving the desired effect of liberalizing the foreign exchange market, these restrictions resulted in an influx of dollars into the parallel market. Consequently, the gap between the parallel market and official market exchange rates for the naira has widened. In late January, the naira reached a new low against the US dollar, and its value has continued to decline since then.
According to local reports, the removal of the caps on naira payout rates is already yielding positive results. On February 1, the naira experienced a more than 8% gain against the dollar. Analysts believe that this surge is directly linked to the central bank's decision to eliminate the allowable limit. Furthermore, this recovery of the naira's value against the dollar comes at a time when licensed foreign exchange dealers were considering halting their operations.
Overall, this policy adjustment by the Central Bank of Nigeria is a significant step towards further liberalizing the foreign exchange market. By removing the caps on naira payout rates for international money transfer operators, the CBN aims to enhance the stability and value of the naira in the official foreign exchange market.
What are your thoughts on this development? Share your opinion in the comments section below.
Frequently Asked Questions
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 rare metals are often called “precious” as they are very difficult to find and highly valuable. They make excellent investments for your money and help you protect your future from inflation and economic instability.
Bullion can be bought via various channels, such as online retailers, large coin dealers and grocery stores.
A precious metal IRA lets you invest in bullion direct, instead of purchasing stock. This allows you to receive dividends every year.
Unlike regular IRAs, precious metal IRAs don't require paperwork or annual fees. Instead, you only pay a small percentage on your gains. Additionally, you have access to your funds at no cost whenever you need them.
Is it a good retirement strategy to buy gold?
Buying gold as an investment may not seem very appealing at first glance, but when you consider how much people spend on average on gold per year worldwide, it becomes worth considering.
Physical bullion bar is the best way to invest in precious metals. But there are many other options for investing in gold. You should research all options thoroughly before making a decision on which option you prefer.
If you don’t have the funds to invest in safe places, such as a safe deposit box or mining equipment companies, buying shares of these companies might be a better investment. Owning gold stocks should work well if you need cash flow from your investment.
You also can put your money into exchange-traded funds (ETFs), which essentially give you exposure to the price of gold by holding gold-related securities instead of actual gold. These ETFs often include stocks of gold miners, precious metals refiners, and commodity trading companies.
Should You Buy or Sell Gold?
Gold was a safe investment option for those who were in financial turmoil. Many people are now turning their backs on traditional investments like stocks and bonds, and instead look to precious metals like Gold.
The trend for gold prices has been upward in recent years but they still remain low relative to other commodities like silver and oil.
This could be changing, according to some experts. They believe gold prices could increase dramatically if there is another global financial crises.
They also mention that gold is becoming more popular due to its perceived worth and potential return.
Consider these things if you are thinking of investing in gold.
- Consider whether you will actually need the money that you are saving for retirement. It's possible to save for retirement without putting your savings into gold. However, you can still save for retirement without putting your savings into gold.
- You should also be aware of what you are getting into before you buy gold. There are many types of gold IRA accounts. Each offers varying levels of flexibility and security.
- Don't forget that gold does not offer the same safety level as a bank accounts. You may lose your gold coins and never be able to recover them.
Do your research before you buy gold. Make sure to protect any gold you already own.
How much should precious metals be included in your portfolio?
To answer this question, we must first understand what precious metals are. Precious metals are those elements that have an extremely high value relative to other commodities. This makes them extremely valuable for trading and investing. Gold is today the most popular precious metal.
There are however many other types, including silver, and platinum. The price of gold fluctuates, but it generally remains stable during times of economic turmoil. It is also unaffected significantly by inflation and Deflation.
All precious metals prices tend to rise with the overall market. But they don't always move in tandem with one another. If the economy is struggling, the gold price tends to rise, while the prices for other precious metals tends to fall. Investors expect lower interest rate, making bonds less appealing investments.
When the economy is healthy, however, the opposite effect occurs. Investors choose safe assets such Treasury Bonds over precious metals. These precious metals are rare and become more costly.
Diversifying across precious metals is a great way to maximize your investment returns. Additionally, since the prices of precious metals tend to rise and fall together, it's best to invest in several different types of precious metals rather than just focusing on one type.
How is gold taxed within a Roth IRA
The tax on an investment account is based on its current value, not what you originally paid. All gains, even if you have invested $1,000 in a mutual funds stock, are subject to tax.
However, if the money is deposited into a traditional IRA/401(k), the tax on the withdrawal of the money is not applicable. Capital gains and dividends earn you no tax. This applies only to investments made for longer than one-year.
The rules that govern these accounts differ from one state to the next. For example, in Maryland, you must take withdrawals within 60 days after reaching age 59 1/2 . In Massachusetts, you can wait until April 1st. New York has a maximum age limit of 70 1/2. To avoid penalties, plan ahead so you can take distributions at the right time.
Are gold investments a good idea for an IRA?
Gold is an excellent investment for any person who wants to save money. You can also diversify your portfolio by investing in gold. But gold is not all that it seems.
It has been used as a currency throughout history and is still a popular method of payment. It is often called “the oldest currency in the world.”
But gold, unlike paper currency, which is created by governments, is mined out from the ground. It is very valuable, as it is rare and hard to create.
The price of gold fluctuates based on supply and demand. When the economy is strong, people tend to spend more money, which means fewer people mine gold. Gold's value rises as a result.
On the flip side, people save cash for emergencies and don't spend it. This means that more gold is produced, which reduces its value.
This is why it makes sense to invest in gold for individuals and companies. If you make an investment in gold, you can reap the economic benefits whenever the economy is growing.
You'll also earn interest on your investments, which helps you grow your wealth. Plus, you won't lose money if the value of gold drops.
Should you open a Precious Metal IRA
It is essential to be aware of the fact that precious metals do not have insurance coverage before opening an IRA. There is no way to recover money that you have invested in precious metals. This includes all investments that are lost to theft, fire, flood, or other causes.
Investing in physical gold and silver coins is the best way to protect yourself from this type of loss. These items are timeless and have a lifetime value. If you were to offer them for sale today, they would likely fetch you more than you paid when you bought them.
When opening an IRA account, make sure you choose a reputable company offering competitive rates and high-quality products. You should also consider using a third party custodian to protect your assets and give you access at any time.
When you open an account, keep in mind that you won't receive any returns until your retirement. Remember the future.
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- 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)
- 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)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- Saddam Hussein's InvasionHelped Uncage a Bear in 1990 – WSJ
- You want to keep gold in your IRA at home? It's Not Exactly Lawful – WSJ
Gold IRAs: A Growing Trend
The gold IRA trend is growing as investors seek ways to diversify their portfolios while protecting against inflation and other risks.
Owners can invest in gold bars and bullion with the gold IRA. It is a tax-free investment that can be used to grow wealth and offers an alternative investment option to those who are concerned about stocks or bonds.
Investors can manage their assets with a gold IRA without worrying about market volatility. They can also use the gold IRA as a protection against potential problems like inflation.
Physical gold is also a great investment option, as it has unique properties like durability, portability, divisibility, and portability.
Additional benefits of the gold IRA include the ability to quickly pass ownership to heirs. Additionally, the IRS does not consider gold a money or a commodity.
This means that investors who are looking for financial safety and security are becoming more interested in the gold IRA.
By: Terence Zimwara
Title: Central Bank of Nigeria Removes Caps on Naira Payout Rates for International Money Transfer Operators
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
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