Official Exchange Rate Matches Unofficial Market Rate
The Nigerian currency, the naira, recently reached a new low against the US dollar, with an official exchange rate of 1,248 naira for every greenback. This rate closely matches the rates offered on the unofficial foreign exchange market, where the naira has been steadily depreciating.
Abandoning the Fixed Exchange Rate Regime
When President Bola Ahmed Tinubu took office in May, the Central Bank of Nigeria (CBN) decided to abandon the fixed exchange rate regime. This move initially caused the naira to plunge by 30%, and it has continued to depreciate since then.
On December 19, the naira briefly hit a record low of 1,248 naira for every US dollar before recovering to 845 naira by the end of the day. However, on the unofficial market, the naira's value against the greenback continued to decline, with one dollar buying 1,228 naira by December 20.
Challenges in Generating Foreign Exchange
Experts believe that Nigeria's inability to generate enough foreign exchange to support its currency is one of the main reasons for the naira's continued depreciation. The country's economy relies heavily on oil exports, and the decline in oil prices has put pressure on its foreign exchange reserves.
Predictions for the Future
CBN Governor Olayemi Cardoso, speaking before the Nigerian Senate and House of Representatives Joint Committee, expressed optimism about the naira's future. He predicted that the domestic economy would maintain a positive trajectory in 2024, with inflation and exchange rate pressures expected to decrease.
Although the current situation may be challenging, there is hope that the Nigerian currency will stabilize and regain its strength against the US dollar in the coming years.
What are your thoughts on this story? Let us know in the comments section below.
Frequently Asked Questions
How much should precious metals make up your portfolio?
Before we can answer this question, it is important to understand what precious metals actually are. Precious metals have elements with an extremely high worth relative to other commodity. This makes them very valuable in terms of trading and investment. The most traded precious metal is gold.
There are however many other types, including silver, and platinum. The price for gold is subject to fluctuations, but stays relatively stable in times of economic turmoil. It is also relatively unaffected both by inflation and deflation.
As a general rule, the prices for all precious metals tend to increase with the overall market. They do not always move in the same direction. The price of gold tends to rise when the economy is not doing well, but the prices of the other precious metals tends downwards. Investors are more likely to expect lower interest rates making bonds less attractive investments.
In contrast, when the economy is strong, the opposite effect occurs. Investors are more inclined to invest in safe assets, such as Treasury Bonds, and they will not demand precious metals. Because they are rare, they become more pricey and lose value.
Diversifying across precious metals is a great way to maximize your investment returns. You should also diversify because precious metal prices can fluctuate and it is better to invest in multiple types of precious metals than in one.
Can I own a gold ETF inside a Roth IRA
Although a 401k plan might not provide this option, you should still consider other options like an Individual Retirement Account (IRA).
A traditional IRA allows for contributions from both employer and employee. An Employee Stock Ownership Plan (ESOP) is another way to invest in publicly traded companies.
An ESOP gives employees tax advantages as they share the stock of the company and the profits it makes. The money invested in the ESOP is then taxed at lower rates than if it were held directly in the hands of the employee.
You can also get an Individual Retirement Annuity, or IRA. An IRA allows for you to make regular income payments during your life. Contributions to IRAs will not be taxed
Is buying gold a good option for retirement planning?
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.
The best form of investing is physical bullion, which is the most widely used. However, there are many other ways to invest in gold. It is best to research all options and make informed decisions based on your goals.
For example, purchasing shares of companies that extract gold or mining equipment might be a better option if you aren't looking for a safe place to store your wealth. If you are looking for cash flow from your investment, buying gold stocks will work well.
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 may include stocks that are owned by gold miners or precious metals refining companies as well as commodity trading firms.
- You can only purchase gold bars at least 99.5% purity. (forbes.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 take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- Saddam Hussein's Invasion Helped Uncage a Bear In 1990 – WSJ
- How do you keep your IRA Gold at Home? It's Not Exactly Legal – WSJ
- Gold IRA: Add Some Sparkle To Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
The growing trend of gold IRAs
As investors look for ways to diversify their portfolios and protect themselves against inflation, the gold IRA trend is on the rise.
A gold IRA allows investors the freedom to manage their wealth without worrying about volatility in the markets. The gold IRA can be used to protect against inflation or other potential problems.
Investors also get the unique benefits of owning physical Gold, including its durability, portability, flexibility, and divisibility.
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: Report: Nigerian Currency Hits Record Low Against US Dollar
Sourced From: news.bitcoin.com/report-nigerian-currency-plunges-to-new-low-versus-the-us-dollar/
Published Date: Fri, 22 Dec 2023 11:00:12 +0000