Naira on Wednesday depreciated against the dollar at the investors and exporters window, exchanging N664.04 to 1.
The naira dropped by 40.78 per cent compared with N471.67 it exchanged for 1 on Tuesday.
The depreciation followed the Central Bank of Nigeria (CBN) directive to banks to remove the rate cap on the naira at the Investors and Exporters Window.
The directive would allow a free float of the nations currency against the dollar and other global currencies.
The open indicative rate stood at N473.83 to the dollar on Wednesday.
An exchange rate of N791 to 1 was the highest rate recorded within the days trading before it settled at N664.04.
The naira sold for as low as 461 to 1 within the days trading.
On Wednesday, a total of 193.33 million was traded at the official Investors and Exporters window.
Meanwhile, Ndubisi Nwokoma, a director at the Centre for Economic Policy Analysis and Research, University of Lagos, said the CBN directive for a free naira float was a good development.
The CBN decision is a good development, hoping that unnecessary arbitrage (roundtripping) would be eliminated from the market.
We expect that the foreign exchange rate will trend downwards when foreign capital inflow increases, following these, Mr Nwokoma noted.
The economic expert explained that the negative side is that many assets or foreign sectors related to naira prices, like external debt, among others, will be adjusted upwards with 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, Mr Nwokoma stated.