Experts in Nigerian economy say that the five-year-old agreement between Nigeria and China on currency swaps has not helped to ease the pressure on the Nigerian currency. According to an expert, the large trade deficit between Nigeria and China is holding back the implementation of the currency swap agreement.
Reduce the pressure on the Naira
Experts on Nigerian economics say that the five-year-old currency exchange agreement between Nigeria and China has not been able to reduce the pressure on the Nigerian naira. The agreement, signed between the Central Bank of Nigeria and the People's Bank of China, was intended to ease pressure on Nigeria's reserves and ensure stability of foreign exchange.
Since the signing of the swap agreement in 2018, however, the Nigerian currency depreciated against the dollar. From N305:$1 to N460:$1 by the first week in April 2023. The exchange rate for the Nigerian currency against the yuan fell from N48:CNY1 in 2018 to N66.70 CNY1 on 6 April 2023. The naira/dollar rate was reported to be over N730 per $1 on the parallel foreign exchange market. This is a major source of greenbacks for Nigerian individuals and businesses.
The failure of the currency exchange arrangement came as several countries were attempting to or have established similar arrangements with China.
Taiwo Oyedele of PWC Nigeria's tax and corporate advisory service pointed out that the trade imbalance between China and Nigeria is the reason why the currency exchange arrangement seems to be failing to stop the naira from declining.
"The implementation of the agreement has been difficult so far due to a trade imbalance between Nigerian and Chinese. "We import so much from China but we export less, and this has actually been declining, in addition to relative instability of the naira's value," Oyedele said.
Oyedele believes that Nigeria can remedy the situation by substituting locally produced products for imports or by promoting them.
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Frequently Asked Questions
What are some of the advantages and disadvantages to a gold IRA
An Individual Retirement Plan (IRA) has a major advantage over regular savings accounts. It doesn't tax any interest earned. This makes an IRA a great choice for people who are looking to save money but don’t want to pay any tax on the interest earned. But, this type of investment comes with its own set of disadvantages.
To give an example, if your IRA is withdrawn too often, you can lose all your accumulated funds. The IRS may prohibit you from withdrawing funds from your IRA before you are 59 1/2 years of age. If you do withdraw funds from your IRA you will most likely be required to pay a penalty.
A disadvantage to managing your IRA is the fact that fees must be paid. Many banks charge between 0.5%-2.0% per year. Other providers charge monthly management costs ranging from $10-50.
If you prefer your money to be kept out of a bank, then you will need insurance. Most insurers require you to own a minimum amount of gold before making a claim. It is possible that you will be required to purchase insurance that covers losses of up to $500,000.
If you choose to go with a gold IRA, you'll need to determine how much gold you want to use. Some providers limit how many ounces you can keep. Others allow you the freedom to choose your own weight.
You'll also need to decide whether to buy physical gold or futures contracts. Futures contracts for gold are less expensive than physical gold. However, futures contracts give you flexibility when buying gold. They let you set up a contract that has a specific expiration.
You'll also need to decide what kind of insurance coverage you want. The standard policy doesn’t provide theft protection or loss due fire, flood, or earthquake. It does provide coverage for damage from natural disasters, however. If you live near a high-risk region, you might want to consider additional coverage.
You should also consider the cost of storage for your gold. Insurance doesn't cover storage costs. Safekeeping costs can be as high as $25-40 per month at most banks.
If you decide to open a gold IRA, you must first contact a qualified custodian. Custodians keep track of your investments and ensure compliance with federal regulations. Custodians don't have the right to sell assets. Instead, they must maintain them for as long a time as you request.
After you have decided on the type of IRA that best suits you, you will need to complete paperwork detailing your goals. Your plan should include information about the investments you want to make, such as stocks, bonds, mutual funds, or real estate. Also, you should specify how much each month you plan to invest.
You will need to fill out the forms and send them to your chosen provider together with a check for small deposits. The company will review your application and send you a confirmation letter.
A financial planner is a good idea when opening a gold IRA. Financial planners are experts at investing and can help you determine which type of IRA is best for you. They can also help reduce your costs by suggesting cheaper options for purchasing insurance.
What are the benefits of having a gold IRA?
You can save money on retirement by putting your money into an Individual Retirement Account. You can withdraw it at any time, but it is tax-deferred. You have complete control over how much you take out each year. And there are many different types of IRAs. Some are better suited for people who want to save for college expenses. Some are better suited for investors who want higher returns. Roth IRAs are a way for individuals to make contributions after the age of 59 1/2, and then pay taxes on any earnings upon retirement. Once they start withdrawing money, however, the earnings aren’t subject to tax again. This account is a good option if you plan to retire early.
Because it allows you money to be invested in multiple asset classes, a ‘gold IRA' is similar to any other IRAs. Unlike a regular IRA where you pay taxes on gains, a gold IRA doesn't require you to worry about taxation while you wait to get them. This makes gold IRA accounts excellent options for people who prefer to keep their money invested instead of spending it.
You can also enjoy automatic withdrawals, which is another benefit of owning your gold through an IRA. This means that you don't need to worry about making monthly deposits. You could also set up direct debits to never miss a payment.
Finally, gold is one of the safest investment choices available today. Because it isn't tied to any particular country its value tends be steady. Even during economic turmoil, gold prices tend to stay relatively stable. It is therefore a great choice for protecting your savings against inflation.
Should you open a Precious Metal IRA
Precious metals are not insured. This is the most important fact to know before you open an IRA account. You cannot recover any money you have invested. This includes losing all your investments due to theft, fire, flood, etc.
Investing in physical gold and silver coins is the best way to protect yourself from this type of loss. These items can be lost because they have real value and have been around for thousands years. They are likely to fetch more today than the price you paid for them in their original form.
If you decide to open an IRA account, choose a reputable company that offers competitive rates and products. Consider using a third-party custody company to keep your assets safe and allow you to access them at any time.
Remember that you will not see any returns unless you are retired if you open an Account. Remember the future.
Are gold investments a good idea for an IRA?
For anyone who wants to save some money, gold can be a good investment. It's also a great way to diversify your portfolio. But there is more to gold than meets the eye.
It has been used as a currency throughout history and is still a popular method of payment. It is often called “the most ancient currency in the universe.”
But gold, unlike paper currency, which is created by governments, is mined out from the ground. That makes it very valuable because it's rare and hard to create.
The supply and demand for gold determine the price of gold. If the economy is strong, people will spend more money which means less people can mine gold. The result is that gold's value increases.
On the flipside, people may save cash rather than spend it when the economy slows. This means that more gold is produced, which reduces its value.
This is why gold investment makes sense for both individuals and businesses. You'll reap the benefits of investing in gold when the economy grows.
In addition to earning interest on your investments, this will allow you to grow your wealth. Additionally, you won't lose cash if the gold price falls.
What is the value of a gold IRA
There are many benefits to a gold IRA. It is an investment vehicle that can diversify your portfolio. You can control how much money is deposited into each account as well as when it's withdrawn.
You can also rollover funds from other retirement accounts to a gold IRA. This makes for an easy transition if you decide to retire early.
The best part about gold IRAs? You don't have to be an expert. They're readily available at almost all banks and brokerage firms. You do not need to worry about fees and penalties when you withdraw money.
That said, there are drawbacks too. Gold has historically been volatile. So it's essential to understand why you're investing in gold. Do you want safety or growth? Are you trying to find safety or growth? Only after you have this information will you make an informed decision.
If you plan to keep your gold IRA indefinitely, you'll probably want to consider buying more than one ounce of gold. One ounce doesn't suffice to cover all your needs. Depending on the purpose of your gold, you might need more than one ounce.
You don’t necessarily need a lot if you’re looking to sell your gold. You can even get by with less than one ounce. However, you will not be able buy any other items with those funds.
Statistics
- 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)
- 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)
- 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
cftc.gov
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
forbes.com
investopedia.com
How To
How to Keep Physical Gold in an IRA
The easiest way to invest is to buy shares in companies that make gold. However, there are risks associated with this strategy. It isn't always possible for these companies to survive. Even if the company survives, they still face the risk of losing their investment due to fluctuations in gold's price.
The alternative is to buy physical gold. This requires you to either open up your account at a bank or an online bullion dealer or simply purchase gold from a reputable seller. This option offers the advantages of being able to purchase gold at low prices and easy access (you don’t need to deal directly with stock exchanges). It is also easier to check how much gold you have stored. You'll get a receipt showing exactly what you paid, so you'll know if any taxes were missed. You're also less susceptible to theft than investing with stocks.
There are however some disadvantages. For example, you won't benefit from banks' interest rates or investment funds. Additionally, you won’t be able diversify your holdings. You will remain with the same items you bought. The taxman might also ask you questions about where your gold is located.
Visit BullionVault.com to find out more about gold buying in an IRA.
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By: Terence Zimwara
Title: Report: Nigeria-China Currency Swap Agreement Fails to Ease Pressure on the Naira
Sourced From: news.bitcoin.com/report-nigeria-china-currency-swap-agreement-fails-to-ease-pressure-on-the-naira/
Published Date: Sun, 16 Apr 2023 09:30:49 +0000
