SINGAPORE -(Dow Jones)- Singapore's central bank unexpectedly tightened its monetary policy stance by raising the slope of the local dollar's trading band "slightly," saying inflation remains persistent while economic growth has improved.
The move came as the government reported better-than-expected economic growth in the first quarter. The economy grew 9.9% on quarter in seasonally adjusted and annualized terms, higher than the 6.3% median forecast in a Dow Jones poll.
The Monetary Authority of Singapore also restored a narrower trading band for the local dollar while continuing with its policy of a modest and gradual appreciation of the Singapore dollar nominal effective exchange rate policy band. There will be no change to the level at which the band is centered, it added.
The central bank guides the local currency within an undisclosed, trade-weighted band, using the exchange rate rather than interest rates as its monetary-policy tool because foreign trade dwarfs domestic demand in Singapore's nearly US$260 billion economy.
Economists had expected the central bank to stand pat. All 15 analysts surveyed by Dow Jones Newswires ahead of the announcement said they expected the MAS to keep the Singapore dollar's nominal effective exchange rate against a basket of currencies on its current path of modest and gradual appreciation.
-By Gaurav Raghuvanshi, Dow Jones Newswires; +65 64154 154; email@example.com
(END) Dow Jones Newswires
April 12, 2012 20:26 ET (00:26 GMT)
Copyright (c) 2012 Dow Jones & Company, Inc.