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.