World

Vietnam doubles currency trading band to spur exports after China devalues yuan

Vietnam doubled the trading band of its currency to allow it to weaken following an unexpected devaluation of the Chinese yuan.

The State Bank of Vietnam said in a statement Wednesday that the dong can now be traded in a band 2 percent above or below the central bank-set reference rate compared with 1 percent before.

The announcement comes after the People's Bank of China devalued the tightly-controlled yuan by 1.9 percent on Tuesday, its biggest one-day fall in a decade, and let it drop another 1.6 percent Wednesday.

Vietnam's central bank said the yuan's devaluation will have a "negative impact on the Vietnamese economy" because China is Vietnam's largest trading partner.

Two-way trade was $59 billion last year in which Vietnam recorded a deficit of $29 billion.