The offshore yuan edged higher around 6.81 per dollar on Wednesday, trimming losses in the previous session as the People’s Bank of China kept its benchmark lending rates unchanged. The central bank held the one-year loan prime rate (LPR) at 3.0% and the five-year LPR at 3.5% for a twelfth straight month in May, highlighting policymakers’ cautious stance amid heightened geopolitical tensions in the Middle East. The decision came despite signs of slowing domestic momentum, as industrial output slowed to its lowest level since July 2023, while retail sales eased to its weakest level since December 2022. Moreover, both consumer and producer inflation accelerated, driven largely by higher energy prices and ongoing supply-chain disruptions linked to the conflict. Still, the yuan’s gains were capped by a stronger US dollar, as emerging Asian currencies have come under pressure since the Middle East conflict began in February.