A New Low for the Nigerian Naira
The Nigerian currency, the Naira, has recently experienced a significant plunge against the U.S. dollar on the official market. On January 25th, it briefly fell to NGN1,398 per greenback. This new record low almost converged with the parallel market exchange rate of NGN1,400:USD1.
Continued Depreciation
The depreciation of the Naira is not a recent phenomenon but rather a continuation of a trend that started when Bola Tinubu assumed the presidency, succeeding Muhammadu Buhari and removing former Central Bank of Nigeria (CBN) Governor, Godwin Emefiele. Prior to this change, the Nigerian central bank had maintained a fixed exchange rate of just under NGN500:USD1.
Since the appointment of the new CBN leadership, the Naira has steadily depreciated against major currencies on both the official and unofficial markets. Experts in the Nigerian economy attribute this ongoing slide to a shortage of foreign exchange.
The Undervalued Naira
Olayemi Cardoso, the current CBN governor, recently stated that the Naira is undervalued and steps are being taken to rectify this situation. Speaking at the launch of an economic outlook report, Cardoso expressed optimism that coordinated measures on the fiscal side will contribute to genuine price discovery, leading to a more balanced and stable exchange rate.
According to a report in the Leadership, the CBN is planning to implement various measures to ensure that all foreign exchange inflows are returned to the central bank. These steps aim to enhance the stability of the Naira by boosting investor confidence and making Nigeria an attractive foreign direct investment destination.
What Do You Think?
Do you agree with the CBN governor's assessment of the Naira's value? Share your thoughts in the comments section below.
Frequently Asked Questions
What does gold do as an investment?
Supply and demand determine the gold price. It is also affected negatively by interest rates.
Due to limited supplies, gold prices are subject to volatility. Additionally, physical gold can be volatile because it must be stored somewhere.
How is gold taxed within an IRA?
The fair market value of gold sold is the basis for tax. You don't pay taxes when you buy gold. It isn't considered income. If you sell it later you will have a taxable profit if the price goes down.
Loans can be secured with gold. Lenders look for the highest return when you borrow against assets. In the case of gold, this usually means selling it. However, there is no guarantee that the lender would do this. They may just keep it. Or they might decide to resell it themselves. In either case, you risk losing potential profits.
In order to avoid losing your money, only lend against your precious metal if you plan to use it to secure other collateral. It's better to keep it alone.
What amount should I invest in my Roth IRA?
Roth IRAs allow you to deposit your money tax-free. The account cannot be withdrawn from until you are 59 1/2. However, if your goal is to withdraw funds before that time, there are certain rules you must observe. First, your principal (the deposit amount originally made) is not transferable. This means that no matter how much you contribute, you can never take out more than what was initially contributed to this account. If you are able to take out more that what you have initially contributed, you must pay taxes.
You cannot withhold your earnings from income taxes. So, when you withdraw, you'll pay taxes on those earnings. Let's take, for example, $5,000 in annual Roth IRA contributions. Let's further assume you earn $10,000 annually after contributing. You would owe $3,500 in federal income taxes on the earnings. That leaves you with only $6,500 left. Since you're limited to taking out only what you initially contributed, that's all you could take out.
If you took $4,000 from your earnings, you would still owe taxes for the $1,500 remaining. Additionally, half of your earnings would be lost because they will be taxed at 50% (half the 40%). So even though you received $7,000 in Roth IRA contributions, you only received $4,000.
There are two types: Roth IRAs that are traditional and Roth. Traditional IRAs allow pre-tax contributions to be deducted from your taxable tax income. Your traditional IRA can be used to withdraw your balance and interest when you are retired. There is no limit on how much you can withdraw from a traditional IRA.
Roth IRAs don't allow you deduct contributions. But once you've retired, you can withdraw the entire contribution amount plus any accrued interest. There is no minimum withdrawal limit, unlike traditional IRAs. It doesn't matter if you are 70 1/2 or older before you withdraw your contribution.
What is a gold IRA account?
The Gold Ira Accounts are tax-free investment options for those who want to make investments in precious metals.
You can buy physical gold bullion coins at any time. To start investing in gold, it doesn't matter if you are retired.
The beauty of owning gold as an IRA is you can hold on to it forever. Your gold assets will not be subjected tax upon your death.
Your gold will be passed on to your heirs, without you having to pay capital gains taxes. It is not required that you include your gold in the final estate report because it remains outside your estate.
To open a IRA for gold, you must first create an individual retirement plan (IRA). Once you've done that, you'll receive an IRA custody. This company acts as a mediator between you, the IRS.
Your gold IRA Custodian will manage the paperwork and submit all necessary forms to IRS. This includes filing annual reporting.
Once you've established your gold IRA, you'll be able to purchase gold bullion coins. The minimum deposit required to purchase gold bullion coins is $1,000 You'll get a higher rate of interest if you deposit more.
You'll have to pay taxes if you take your gold out of your IRA. If you're withdrawing the entire balance, you'll owe income taxes plus a 10 percent penalty.
A small percentage may mean that you don't have to pay taxes. There are some exceptions, though. There are some exceptions. For instance, if you take out 30% or more from your total IRA assets, federal income taxes will apply plus a 20 percent penalty.
It's best not to take out more 50% of your total IRA investments each year. You could end up with severe financial consequences.
What is the best way to hold physical gold?
Not just paper money or coins, gold is money. It is an asset that people have used over thousands of years as money, and a way to protect wealth from inflation and economic uncertainties. Investors today use gold to diversify their portfolios because gold is more resilient to financial turmoil.
Many Americans now invest in precious metals. Although owning gold does not guarantee that you will make money investing in it, there are many reasons to consider adding gold into your retirement portfolio.
Another reason is the fact that gold historically has performed better than other assets in times of financial panic. Between August 2011 to early 2013, gold prices rose close to 100 percent while the S&P 500 fell 21 per cent. Gold was one of the few assets that performed better than stocks during turbulent market conditions.
One of the best things about investing in gold is its virtually zero counterparty risk. Your stock portfolio can fall, but you will still own your shares. You can still own your gold even if the company where you invested fails to pay its debt.
Finally, gold provides liquidity. This allows you to sell your gold whenever you want, unlike many other investments. Gold is liquid and therefore it makes sense to purchase small amounts. This allows you to take advantage of short-term fluctuations in the gold market.
Should You Buy Gold?
In the past, gold was considered a haven for investors during economic turmoil. However, today many people are turning away from traditional investments such as stocks and bonds and instead looking toward precious metals such as gold.
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.
Some experts believe that this could change very soon. They believe gold prices could increase dramatically if there is another global financial crises.
They also noted that gold is growing in popularity because of its perceived value as well as potential return.
Here are some things to consider if you're considering investing in gold.
- The first thing to do is assess whether you actually need the money you're putting aside for retirement. You can save money for retirement even if you don't invest in gold. However, you can still save for retirement without putting your savings into gold.
- Second, you need to be clear about what you are buying before you decide to buy gold. Each offers varying levels of flexibility and security.
- Finally, remember that gold doesn't offer the same level of safety as a bank account. It is possible to lose your gold coins.
Do your research before you buy gold. If you already have gold, make sure you protect it.
How much gold should you have in your portfolio?
The amount you make will depend on the amount of capital you have. You can start small by investing $5k-10k. As you grow, you can move into an office and rent out desks. You don't need to worry about paying rent every month. You only pay one month.
Also, you need to think about the type of business that you are going to run. My company is a website creator. We charge our clients about $1000-2000 per monthly depending on what they order. So if you do this kind of thing, you need to consider how much income you expect from each client.
Freelance work is not likely to pay a monthly salary. The project pays freelancers. You might get paid only once every six months.
Decide what kind of income do you want before you calculate how much gold is needed.
I suggest starting with $1k-2k gold and building from there.
Statistics
- 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)
- 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)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
External Links
law.cornell.edu
- 7 U.S. Code SS7 – Designation boards of trade as contract market authorities
- 26 U.S. Code SS 408 – Individual retirement account
irs.gov
bbb.org
forbes.com
- Gold IRA: Add some sparkle to your retirement nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
How To
The History of Gold as an Asset
From ancient times to the beginning of the 20th century, gold was used as a currency. It was popular because of its purity, divisibility. uniformity. scarcity and beauty. Aside from its inherent value, it could be traded internationally. However, since there were no international standards for measuring gold at this point, different weights and measures existed worldwide. One pound sterling in England was equivalent to 24 carats silver, while one livre tournois in France was equal 25 carats. In Germany, one mark was equivalent to 28 carats.
In the 1860s, the United States began to issue American coins made from 90% copper, 10% Zinc, and 0.942 Fine Gold. This led to a decline in demand for foreign currencies, which caused their price to increase. The price of gold dropped because the United States began to mint large quantities of gold coins. Because the U.S. government had too much money coming into circulation, they needed to find a way to pay off some debt. They decided to sell some excess gold to Europe in order to do this.
Since most European countries were not confident in the U.S. dollar they began accepting gold as payment. However, after World War I, many European countries stopped taking gold and began using paper money instead. The value of gold has significantly increased since then. Even though gold's price fluctuates, it is still one of the most secure investments you could make.
—————————————————————————————————————————————————————————————–
By: Terence Zimwara
Title: The Plunge of Nigerian Currency: Efforts Underway to Rectify Undervaluation
Sourced From: news.bitcoin.com/nigerian-currency-plunges-to-new-low-versus-the-usd-central-bank-governor-says-naira-is-undervalued/
Published Date: Sun, 28 Jan 2024 06:30:32 +0000
Did you miss our previous article…
https://altcoinirareview.com/jpmorgan-predicts-bitcoins-downward-pressure-to-ease-as-grayscale-profit-taking-subsides/
