The Central Bank of Nigeria (CBN) recently announced the removal of caps on naira payout rates for international money transfer operators (IMTOs). This policy change aims to further liberalize the foreign exchange market and has already had an impact on the naira's value.
Policy Adjustment for IMTOs
Prior to this change, IMTOs were required to quote rates that did not exceed the previous day's exchange rate by more than 2.5%. However, with the new policy adjustment, IMTOs can now provide naira payout rates based on the prevailing exchange rate. This decision supersedes a CBN circular issued on Sept. 13, 2023.
The implementation of caps on naira exchange rates was initially meant to mitigate the risk of rapid depreciation. However, instead of achieving this goal, the restriction led to an influx of dollars into the parallel market. As a result, the gap between the parallel and official market exchange rates widened, causing the naira to plummet to a new low against the dollar in late January.
Positive Impact and Speculation
Since the removal of the allowable limit, the naira has shown signs of recovery. On Feb. 1, it gained more than 8% against the dollar, which analysts attribute to the policy change. This surge in value coincided with reports that licensed foreign exchange dealers were considering ceasing operations.
While it is still too early to determine the long-term effects of this policy adjustment, early indications suggest that it is achieving the desired results. By removing the caps on naira payout rates, the CBN aims to create a more liberalized foreign exchange market and stabilize the naira's value.
Frequently Asked Questions
What Is a Precious Metal IRA?
You can diversify your retirement savings by investing in precious metal IRAs. This allows you to invest in gold, silver and platinum as well as iridium, osmium and other rare metals. These rare metals are often called “precious” as they are very difficult to find and highly valuable. They are great investments for your money, and they can protect you from inflation or economic instability.
Bullion can be purchased through many channels including online retailers and large coin dealers as well as some grocery stores.
A precious metal IRA lets you invest in bullion direct, instead of purchasing stock. This means you'll receive dividends every year.
Precious metal IRAs have no paperwork or annual fees. Instead, you pay a small percentage tax on the gains. You can also access your funds whenever it suits you.
Is gold a good IRA investment?
Gold is an excellent investment for any person who wants to save money. It's also a great way to diversify your portfolio. There's more to gold that meets the eye.
It has been used throughout the history of currency and remains a popular payment method. It's sometimes called “the world's oldest money”.
Gold, unlike other paper currencies created by governments is mined directly from the earth. Because it is rare and difficult to make, it is extremely valuable.
The supply-demand relationship determines the gold price. If the economy is strong, people will spend more money which means less people can mine gold. The value of gold rises as a consequence.
On the flipside, people may save cash rather than spend it when the economy slows. This leads to more gold being produced which decreases its value.
It is this reason that gold investing makes sense for businesses and individuals. If you have gold to invest, you will reap the rewards when the economy expands.
Also, your investments will earn you interest which can help increase your wealth. Plus, you won't lose money if the value of gold drops.
Is it a good idea to open a Precious Metal IRA
The most important thing you should know before opening an IRA account is that precious metals are not covered by insurance. It is impossible to get back money if you lose your investment. This includes all investments that are lost to theft, fire, flood, or other causes.
You can protect yourself against such losses by purchasing physical gold and silver coins. These items have been around for thousands of years and represent real value that cannot be lost. If you were to sell them today, you would likely receive more than what you paid for them when they were first minted.
Consider a reputable business that offers low rates and good products when opening an IRA. A third-party custodian is a good option. They will protect your assets while giving you easy access whenever you need them.
If you decide to open an account, remember that you won't see any returns until after you retire. Don't forget the future!
Can the government seize your gold?
Your gold is yours and the government cannot take it. You worked hard to earn it. It belongs to you. This rule may not apply to all cases. Your gold could be taken away if your crime was fraud against federal government. You can also lose precious metals if you owe taxes. However, even if you don't pay your taxes, your gold can be kept as property of the United States Government.
Is buying gold a good retirement plan?
While buying gold as an investment may seem unattractive at first glance it becomes worth the effort when you consider how much gold is consumed worldwide each year.
The most popular form of investing in gold is through physical bullion bars. There are many ways to invest your gold. You should research all options thoroughly before making a decision on which option you prefer.
If you don't want to keep your wealth safe, buying shares in companies that extract gold and mining equipment could be a better choice. Owning gold stocks should work well if you need cash flow from your investment.
You can also invest your money in exchange-traded fund (ETFs), which give you exposure to the gold price by holding securities related to gold. These ETFs typically include stocks from gold miners, precious metallics refiners, commodity trading companies, and other commodities.
How much should your IRA include precious metals
The most important thing you should know when investing in precious metals is that they are not just for wealthy people. It doesn't matter how rich you are to invest in precious metals. You can actually make money without spending a lot on gold or silver investments.
You could also consider buying physical coins like bullion bars, rounds or bullion bars. It is possible to also purchase shares in companies that make precious metals. Another option is to make use of the IRA rollover programs offered by your retirement plan provider.
You'll still get the benefit of precious metals no matter which country you live in. Even though they aren't stocks, they still offer the possibility of long-term growth.
Their prices rise with time, which is a different to traditional investments. So, if you decide to sell your investment down the road, you'll likely see more profit than you would with traditional investments.
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- (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)
- 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)
- 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)
- Saddam Hussein's InvasionHelped Uncage a Bear in 1990 – WSJ
- How do you keep your IRA Gold at Home? It's Not Exactly Legal – WSJ
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 universally accepted and loved for its beauty, durability, purity and divisibility. Aside from its inherent value, it could be traded internationally. There was no international standard for measuring gold at that time, so different weights and measures were used around the world. For example, in England, one pound sterling was equal to 24 carats of silver; in France, one livre tournois was equal to 25 carats of gold; in Germany, one mark was equal to 28 carats of gold; etc.
In the 1860s, the United States began to issue American coins made from 90% copper, 10% Zinc, and 0.942 Fine Gold. This resulted in a decline of foreign currency demand and an increase in the price. At this point, the United States minted large amounts of gold coins, causing the price of gold to drop. They needed to pay off debt because they had too much money coming into circulation. They sold some of their excess gold to Europe to pay off the debt.
Many European countries didn't trust the U.S. dollars and started to accept gold for payment. Many European countries began to use paper money and stopped accepting gold as payment after World War I. The price of gold rose significantly over the years. Even though the price of gold fluctuates, it remains one the best investments you can make.
By: Terence Zimwara
Title: 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