Foreign investors had been unnerved by a lack of clear commitment on when the return to a freely-determined exchange rate might come, analysts said. The regulator said it was increasing the net foreign exchange open position for banks to 2.5 percent from 1 with immediate effect, a first step toward lifting measures brought in February to stem the naira currency's sharp decline, according to Reuters news agency.

February's measures gave the central bank a tighter grip on the exchange rate by preventing banks from trading dollars among themselves but created a wide disparity with the parallel black market, the only alternative for U.S. dollar purchases.

Central Bank Governor Chukwuma Soludo said the monetary policy committee (MPC) had decided at a meeting on Thursday that the exchange rates had stabilized at both the official and parallel markets and that the mid-term outlook was now stable.

"Consequently, the MPC decided to review the series of controls it put in place a few months ago over the next three months and return to the fully liberalized regime we had before the recent controls," Soludo said.

"We believe that the premium between parallel and official exchange rates would narrow significantly in the days ahead. We can sustain the changes over time," he said. At its daily foreign exchange auction on Thursday, the central bank sold naira at 146.63 to the dollar, while the local currency was trading on the black market at 182.