Record Low Exchange Rate and Recovery
The official exchange rate of the Nigerian currency, the naira, recently hit a record low of 1,248 naira for every U.S. dollar. However, it recovered slightly to close the day at 845 naira for every greenback. This plunge in the exchange rate almost matched the rates offered on the unofficial foreign exchange market.
Abandoning the Fixed Exchange Rate Regime
When Nigerian President Bola Ahmed Tinubu took office in May, the Central Bank of Nigeria (CBN) made the decision to abandon the fixed exchange rate regime. This move resulted in an initial 30% depreciation of the naira against the dollar. The CBN then allowed the naira to freely float, causing further depreciation.
Continued Depreciation on the Unofficial Market
Despite the changes in the exchange rate regime, the naira has continued to depreciate against the greenback on the unofficial market. As of December 20, one U.S. dollar could buy 1,228 naira. Many experts attribute this depreciation to Nigeria's inability to generate enough foreign exchange to support its currency.
Predictions for the Future
During his appearance before the Nigerian Senate and House of Representatives Joint Committee, CBN Governor Olayemi Cardoso expressed optimism for the future of the naira. He predicted that the domestic economy would maintain a positive trajectory in 2024. Cardoso also stated that inflation pressures might persist in the short term but are expected to decline by 2024. Additionally, he believes that exchange rate pressures will significantly reduce with the smooth functioning of the foreign exchange market.
What are your thoughts on the current state of the Nigerian naira and its future prospects? Let us know in the comments section below.
Frequently Asked Questions
Can I buy gold with my self-directed IRA?
Although you can buy gold using your self-directed IRA account, you will need to open an account at a brokerage like TD Ameritrade. If you already have a retirement account, funds can be transferred to it.
The IRS allows individuals up to $5.500 annually ($6,500 if you are married and filing jointly). This can be contributed to a traditional IRA. Individuals can contribute as much as $1,000 per year ($2,000 if married filing jointly) to a Roth IRA.
You might want to purchase physical bullion, rather than futures contracts if you are going to invest in gold. Futures contracts can be described as financial instruments that are determined by the gold price. They allow you to speculate on future prices without owning the metal itself. You can only hold physical bullion, which is real silver and gold bars.
How is gold taxed by Roth IRA?
A tax assessment for an investment account will be based on the current market value, and not what you paid initially. If you invest $1,000 into a mutual fund, stock, or other investment account, then any gains are subjected tax.
If you place the money in a traditional IRA, 401(k), or other retirement plan, there is no tax when you take it out. Capital gains and dividends earn you no tax. This applies only to investments made for longer than one-year.
These rules vary from one state to another. Maryland's rules require that withdrawals be taken within 60 days after you turn 59 1/2. Massachusetts allows you to wait until April 1. New York has a maximum age limit of 70 1/2. To avoid penalties, you should plan ahead and take distributions as soon as possible.
What are the advantages of a IRA with a gold component?
There are many benefits to a gold IRA. It's an investment vehicle that allows you to diversify your portfolio. You can control how much money is deposited into each account as well as when it's withdrawn.
You also have the option to roll over funds from other retirement accounts into a gold IRA. This allows you to easily transition if your retirement is early.
The best part? You don’t need to have any special skills to invest into gold IRAs. They are offered by most banks and brokerage companies. You don't have to worry about penalties or fees when withdrawing money.
There are, however, some drawbacks. Gold is historically volatile. Understanding why you invest in gold is crucial. Are you looking for growth or safety? Are you looking for growth or insurance? Only when you are clear about the facts will you be able take an informed decision.
If you are planning to keep your Gold IRA indefinitely you will want to purchase more than one ounce. You won't need to buy more than one ounce of gold to cover all your needs. Depending on the purpose of your gold, you might need more than one ounce.
You don't need to have a lot of gold if you are selling it. You can even live with just one ounce. But, those funds will not allow you to buy anything.
Should You Invest in gold for Retirement?
This will depend on how much money and whether you were able to invest in gold at the time that you started saving. If you're unsure about which option to choose then consider investing in both.
In addition to being a safe investment, gold also offers potential returns. Retirees will find it an attractive investment.
While many investments promise fixed returns, gold is subject to fluctuations. Because of this, gold's value can fluctuate over time.
But this doesn't mean you shouldn't invest in gold. It is important to consider the fluctuations when planning your portfolio.
Another advantage to gold is that it can be used as a tangible asset. Unlike stocks and bonds, gold is easier to store. It is also easily portable.
As long as you keep your gold in a secure location, you can always access it. You don't have to pay storage fees for physical gold.
Investing in gold can help protect against inflation. As gold prices rise in tandem with other commodities it can be a good hedge against rising cost.
Additionally, it will be a benefit to have some of your savings invested into something that won't lose value. Gold usually rises when stocks fall.
Another benefit to investing in gold? You can always sell it. You can also liquidate your gold position at any time you need cash, just like stocks. You don't have to wait for retirement.
If you do decide to invest in gold, make sure to diversify your holdings. You shouldn't try to put all of your eggs into one basket.
Also, don't buy too much at once. Start by purchasing a few ounces. Then add more as needed.
Remember, the goal here isn't to get rich quickly. It is to create enough wealth that you no longer have to depend on Social Security.
While gold may not be the best investment, it can be a great addition to any retirement plan.
- 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)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.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
- 7 U.S. Code SS7 – Designation boards of trade as contract market authorities
- 26 U.S. Code SS 408 – Individual retirement accounts
Tips for Investing Gold
Investing in Gold remains one of the most preferred investment strategies. There are many advantages to investing in Gold. There are many ways you can invest in gold. Some people prefer to buy gold coins in physical form, while others prefer to invest in gold ETFs.
Before you purchase any type or gold, here are some things to think about.
- First, make sure you check if your country allows you own gold. If it is, you can move on. You might also consider buying gold in foreign countries.
- Second, it is important to know which type of gold coin you are looking for. You can go for yellow gold, white gold, rose gold, etc.
- You should also consider the price of gold. Start small and move up. When purchasing gold, diversify your portfolio. You should invest in different assets such as stocks, bonds, real estate, mutual funds, and commodities.
- You should also remember that gold prices can change often. Keep an eye on current trends.
By: Terence Zimwara
Title: The Nigerian Naira Hits Record Low Against the US Dollar, Central Bank Governor Predicts Stabilization in 2024
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