The naira weakened after efforts by the Central Bank of Nigeria to clear a backlog of matured foreign-exchange forward contracts left a number outstanding.

It slumped about 7% to 1,150 naira per dollar on the parallel market on Wednesday from 1,070 the previous day, according to Abubakar Mohammed, chief executive officer of Forward Marketing Bureau de Change Ltd.

That reversed naira strength last week after CBN announced it had cleared foreign-currency contracts with an unspecified number of banks.

The move was a key step targeted by the government to help stabilize the naira, which has fallen sharply since it reformed foreign-exchange controls earlier this year. The unit strengthened to 950 per dollar last week from 1,150 following the central bank’s dollar settlement.

Analysts said the amount of unsettled forward contracts remains substantial.

“The amount offset so far is only a fraction of what is outstanding, and most of the beneficiary banks are international banks,” investment bank FBNQuest said in a note to clients.

The naira also closed weaker in official trade at 870 per dollar on Tuesday, compared with 809 the previous day, according to FMDQ Group, a Lagos-based operator that tracks the data.

Airlines have a large backlog of unmet requests for dollars to repatriate income, but have not been supplied, said Kingsley Nwokoma, president of the Association of Foreign Airlines and Representatives in Nigeria.

The International Air Transport Association said in June that its members had more than $800 million stuck in Nigeria.

Finance Minister Wale Edun said last month that the government expects to attract $10 billion of inflows in the coming weeks to help clear the backlog, ease liquidity and stabilize the currency.

Bloomberg