This is the second increase in a month amid rising global inflation and strengthening U.S. dollar, it said Monday.

For demand deposit and deposit with a term below 1 month, the interest rate ceiling is raised from 0.5% to 1% a year, the bank said in a statement.

The refinancing rate will be increased to 6.0% and the discount rate to 4.5%.

The rising greenback has put pressure on many currencies including the Vietnamese dong which has depreciated by 8.5% since the beginning of the year.

The SBV said the global inflation level remains high and the Fed had raised its rates five times recently, with more hikes expected during the rest of this year and 2023.

"This, coupled with the strengthening of the dollar, has put pressure on domestic interest rates and exchange rate," SBV said.

Prime Minister Pham Minh Chinh said last week that the country would and pursue a flexible and prudent monetary policy throughout next year amid fluctuating energy prices and the Russia-Ukraine crisis.