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The central bank said it would add capital at two-week terms to open market operations while
retaining current daily and weekly terms.
It also instructed major banks to increase lending to smaller banks and to maintain refinancing and swapping interest rates.
The pronouncement immediately helped lower interbank rates from highs of 21-22 per cent to a range of 15-19 per cent per year.
"Intervening promptly will have a good impact on the market, stabilising the market and preventing negative impacts on enterprises," said National Monetary Policy Consulting Council member Tran Hoang Ngan.
The State Bank blamed the current overheating of interbank rates on psychology, as commercial banks needed some time to stabilise liquidity while adjusting to higher deposit interest rates.
On Thursday, commercial banks began offering interest of up to 14 per cent for Vietnamese dong deposits, up from 12 per cent earlier in the week. Some banks were also paying an additional 0.5-3 per cent as bonus interest on deposits, as well as offering vouchers or gifts.
The higher interest contravenes a voluntary agreement entered into banks with the Vietnam Banking Association last Friday to cap deposit interest rates at no more than 12 per cent.