Singapore's central bank trapped between a rock and a hard place

To ease or not to ease is the big question.

Singapore is caught between a rock and a hard place: easing its exchange rate-based monetary policy would strengthen its export competitiveness after China's devaluation of its yuan but may drive out capital and raise borrowing costs in a slow economy, according to a report by Reuters.

Shrinking factory output, an economic contraction and months of falling consumer prices have revived speculation the Monetary Authority of Singapore (MAS) may ease policy at its next review in October.

China's currency devaluation to prop up the world's second-largest economy has only added to the expectations. Yet, the MAS said last week its current monetary policy remains appropriate.

Read the full report here.