The bank moved the target band of the currency to 160-176 naira to the US dollar, compared with 150-160 naira previously, owing to prolonged currency weakness and high dollar demand.
The last time it devalued was in November 2011, when it lowered the band from 145-150 naira to the dollar.
The bank also raised interest rates to 13% on Tuesday, from 12%.
The naira has taken a beating over the past few months, as falling oil prices have shaken confidence in the assets of Africa’s leading energy producer and biggest economy.
Defending the move, central bank governor Godwin Emefiele said efforts to defend the naira had led to "dwindling foreign reserves" and that a "more flexible exchange rate is the most viable option".
"Falling oil prices have consistently reduced the accretion to external reserves, thus constraining the ability of the bank to continually defend the naira and sustain the stability of the naira exchange rate," Emefiele said.
Nigeria’s foreign reserves fell to a five-month low of $37.17bn by November 21, down 5.1% from the previous month as the central bank stepped up its defence of the ailing currency, figures on the bank’s website showed on Tuesday. Despite billions of dollars spent on supporting it, the naira has fallen 10% this year versus the dollar on concerns that a continuous slide in global oil prices could undermine the central bank’s efforts to keep defending the currency.
It opened at a record low on Monday of 178.25.
According to its website, the central bank has spent an average of $27.9m a day this year defending the naira, which has tracked falls in other emerging market currencies, especially those in economies that are more sensitive to changes in the oil price, such as the Russian rouble.
In a further tightening move on Tuesday, the central bank hiked banks’ cash reserve ratio for private sector bank deposits to 20%, from 15% previously.
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