FACT-CHECK: Did Cardoso Say CBN Isn’t Defending Naira?

FACT-CHECK: Did Cardoso Say CBN Isn’t Defending Naira?

Some newspapers published headlines such as ‘CBN Not Defending Naira’ within the week. To date, the premise that the Central Bank of Nigeria (CBN) is not defending the naira against the dollar has been based on Olayemi Cardoso’s words.

Cardoso, the CBN governor, was at the 2024 Spring Meetings of the International Monetary Fund and the World Bank in Washington DC, United States, on Wednesday.

FIJ looked at his words as quoted by different observers and found a reshaping.

CLAIM: The CBN is not defending the naira against the dollar, i.e., Cardoso is not spending the country’s external reserves on defending the value of the naira.

VERIFICATION: FIJ saw excerpts from Cardoso’s statements in Washington, which were responses to interview questions:

“I know that the issue of defending the naira has become an elephant in some room. I want to try to make this as clear as possible. It is not our intention to defend the naira. It is not. Much as I have read in the recent few days, some opinions with respect to what is happening with our reserves. If you think back to what our overall policy and philosophy has been here, you can see that it is counter-intuitive. Basically, what we are encouraging is for the market to be a willing buyer, willing seller, and price-discover-led one. Ultimately, I perceive a future where the CBN may really not need to intervene except in very unusual circumstances.

“As long as we have a vibrant currency market, why do we need to intervene? I can understand that, especially at the outset, we have experienced that we needed to get the Bureau de Change segment going. We had to release tiny amounts of money to catalyse those happenings. Individuals must have funds to send their kids abroad and do things that are important. It is important not to keep them out of the mainstay.

“What we have seen with the shifts in our reserves are the shifts that you would find in any country’s reserve situation. When debts are due and payments need to be made, they are to be made, because that is also part of keeping your credibility intact.

“In two days, we had about $600m that came into the reserves account. I wouldn’t want people to be too excited. We want a market that operates on its own – willing buyer, willing seller, price discovery. That is where we are going. The shifts that we are seeing in our discovery have little or nothing to do with defending the naira, and that is certainly not our objective.”

This was Cardoso’s response to these questions: How much was spent on defending the naira in the first quarter of this year? Where were these defences from? Reserves or Foreign Portfolio Investment (FPI) inflows?

Cardoso did not give a definite answer to the questions. In fact, he sidestepped the questions by not admitting or denying that the CBN defended the naira in the first quarter of 2024.

The CBN governor only said that it was not his “intention to defend the naira.” He refused to say if the intention was acted upon or not in Q1 2024.

VERDICT: The claims are false and misleading; Cardoso did not say that the CBN was not defending the naira.