Singapore’s central bank tightened its monetary policy today by re-centring its Singapore dollar policy band upwards and by shifting its policy to modest and gradual appreciation for the currency.

The decision came as the economy expanded 13.1% in the first quarter of 2010 from a year earlier, preliminary government data showed today.

“MAS will therefore re-centre the exchange rate policy band at the prevailing level of the S$NEER,” the Monetary Authority of Singapore (MAS) said in a statement.

“Further, we will shift the policy band from that of a zero% appreciation to one of modest and gradual appreciation.”

Ten out of 18 economists and currency strategists surveyed in a Reuters poll last month had expected the MAS would wait until its next policy decision in October to tighten.

The MAS sets policy by managing the Singapore dollar in a secret trade-weighted band against a basket of currencies, instead of setting interest rates.