Singapore's central bank, which last month adjusted the trading range for its currency, said monetary policy remains “appropriate” amid signs the economy may be past the deepest part of the nation's recession.

 The city state is not expected to have a “sharp rebound” in growth, Monetary Authority of Singapore Managing Director Heng Swee Keat said in an interview today. It's “still too early” to predict if the economy will grow in 2010, he said.

The worst global recession since World War II has led to an 11-month slump in Singapore exports, forcing companies including Chartered Semiconductor Manufacturing Ltd. to fire workers and prompting authorities to cut taxes and subsidize jobs. The government expects the economy to shrink between 6 percent and 9 percent in 2009, the most since independence in 1965.

The International Monetary Fund predicts the Singapore economy will shrink 10 percent this year and post a 0.1 percent contraction in 2010, according to a report today. The island's exports rose 10.8 percent in March from the previous month, suggesting the worst may be over.

Singapore needs the world's biggest economies to rebound before it can post a sustained recovery, Heng said. About 75 percent of Singapore's total demand comes from outside the country, and there is limited room for the nation to move away from an export-led growth model, he said.

The island is better off with its existing growth structure, he said. Singapore's economy will be able to rebound quickly once global growth recovers, Heng said.

Production, Exports

Singapore's gross domestic product has shrunk 11.7 percent since the first three months of 2008, according to the central bank. Industrial production fell the most in at least 13 years in March, and exports dropped 17 percent from a year earlier.

The central bank said last month it would adjust the trading range for the island's dollar, a move economists say effectively devalued the exchange rate. Still, the depreciation was less than what traders were expecting, prompting Heng to say April 18 those who expected more were wrong because there was no reason for “any undue weakening.”

The nation's monetary policy doesn't respond to short-term economic data and is based on the medium-term outlook for inflation and growth, Heng said today.

The central bank expects consumer prices to hold steady or fall 1 percent this year. Inflation slowed to the lowest in 21 months in March