Naira on Wednesday depreciated against the dollar at the Investors and Exporters window, exchanging ₦664.04 to the dollar.
The News Agency of Nigeria (NAN) reports that the local currency dropped by 40.78% when compared with ₦471.67 it exchanged for the dollar on Tuesday.
The depreciation followed the directive by the Central Bank of Nigeria (CBN) to banks to remove the rate cap on the naira at the Investors and Exporters' Window.
The directive would allow for a free float of the nation currency against the dollar and other global currencies. The open indicative rate stood at ₦473.83 to the dollar on Wednesday.
An exchange rate of ₦791 to the dollar was the highest rate recorded within the day's trading before it settled at ₦664.04.
The naira sold for as low as ₦461 to the dollar within the day’s trading.
A total of $193.33 million was traded at the official Investors and Exporters window on Wednesday.
Meanwhile, Prof. Ndubisi Nwokoma, Director, Centre for Economic Policy Analysis and Research, University of Lagos, said the CBN directive for a free float of the naira was a good development.
"The CBN decision is a good development, hoping that unnecessary arbitrage (round tripping) would be eliminated from the market.
"We expect that the foreign exchange rate will trend downwards when foreign capital inflow increases, following from these.
"The negative side is that many assets or foreign sector related to naira prices, like external debt, among others, will be adjusted upwards with some minimal effects on inflation.
"Inflationary effects may not be much, given that many economic agents had been sourcing for their foreign exchange at the parallel market before now," he said.