Global Macro Brief: Beijing's Reserve Currency Push and Middle East Tensions

While financial markets grapple with US monetary policy shifts, significant developments in China and the energy sector are reshaping longer-term macro flows.

Xi Jinping's 'Strong Currency' Mandate

President Xi Jinping has explicitly renewed calls to elevate the Chinese Yuan (CNY) to the status of a “powerful currency” and a primary global reserve asset. In an article published in Qiushi, Xi emphasized the need for the Yuan to become widely used in international trade, investment, and foreign exchange reserves.

Macro Implication: This political directive suggests the People's Bank of China (PBOC) may prioritize currency stability and gradual appreciation over competitive devaluation.

Tourism Inflows: Supporting this structural strength, China has seen a 40% surge in inbound tourism recently. This “service trade” surplus generates organic demand for the Yuan, providing a natural floor for the currency against the surging US Dollar.

Energy Markets: OPEC+ Holds, War Risks Linger

The cartel, led by Saudi Arabia and Russia, agreed on Sunday to keep oil output quotas unchanged for March. This discipline has underpinned Saudi Arabia's GDP growth, which hit a three-year high of 4.5% in 2025.

Tensions remain elevated as US President Donald Trump hinted at a potential deal with Iran, even as Iran's Supreme Leader warned of a “regional war”.

Price Action: Brent Crude is holding above $70/barrel, supported by the supply freeze but capped by concerns over global demand growth.

US Government: Partial Shutdown

The US federal government entered a “technical partial shutdown” over the weekend. While House Speaker Mike Johnson expressed confidence in a resolution by Tuesday, the disruption creates friction for economic data releases, though market impact remains muted compared to the Warsh nomination.

Key Data Snapshot

• China Inbound Tourism: 40% surge
• Saudi Arabia GDP (2025): 4.5% (3-year high)
• Brent Crude Support: $70/barrel