Explainer-What is pushing the Nigerian naira to record lows?

investing.com:

By Chijioke Ohuocha

ABUJA (Reuters) — Nigeria's naira is on the brink of breaching 1,000 per dollar after falling to an official record low of 999 last week, Refinitiv data showed, tracing its weakness on the unofficial market where it trades freely.

President Bola Tinubu removed Nigeria's foreign currency controls in June in a bid to get transactions flowing through the official market again to help unify the naira's exchange rates.

But that has only fuelled the currency's weakness and added to inflationary pressures.

Here is what you need to know about the naira.

WHY IS THE NAIRA FALLING?

The central bank has a backlog of accumulated forex demand on the official market, which effectively forces individuals and businesses to head to the black market if they need dollars.

But dollar flows to Nigeria have been falling in the last few years due to declining investment and lower exports of crude oil, which account for more than 90% of the country's export income.

Investors cheered when Tinubu lifted the currency controls, hoping a unified exchange rate would make it easier to access foreign currency, but that is yet to happen.

HOW BIG IS THE FOREIGN CURRENCY BACKLOG?

Nigeria has nearly $7 billion in forex forwards that are past due, which corporates bought from local banks. Banks then repaid foreign credit lines with their own funds when the central bank did not pay out.

That means corporates are unable to get new letters of credit, while the banks are owed dollars. New central bank governor Yemi Cardoso said clearing the backlog was a priority but he gave no timeline for how long it would take.

Some analysts say the forward agreements could be rolled over by 24 to 36 months, giving the central bank more time to find the