SDR- Special Drawing Rights

Special drawing rights (SDR) is a special kind of reserve currency. The International Monetary Fund (IMF) had built it in the year 1969. In view of the way the fluctuations in the dollar and gold are going on, the need for such currency was felt, in view of this, the IMF created this currency. SDR is a special kind of reserve currency artificially prepared by the IMF. It is also called Paper Gold. SDR – Special Drawing Rights

This facility was started in 1969 to improve the status of international liquidity in the world. The IMF issues international reserve asset. This is known as Special Drawing Rights and also known as Paper Gold.it supplements the official stores of member countries. The total allocation for the IMF is about 204 billion SDRs (the US $ 286 billion)

Value of SDR: Special Drawing Rights

  1. SDR is an international reserve asset
  2. It is also not a claim on the IMF
  3. SDR is not a currency
  4. Allocated to members of IMF from time to time
  5. SDR is a potential claim on the IMF member countries
  6. 204 billion SDRs is equivalent to $285 billion in value
  7. Valuation and weight of the IMF currencies basket done once in 5 years
  8. Next valuation to be done on September 30, 2021
  9. SDR exchanged for freely usable currencies

Weightage of SDR: Special Drawing Rights

IMF members can voluntarily exchange SDRs for currency among themselves. The value of the SDR is fixed by 5 currencies i-e the US dollar, the euro, the pound sterling and the Japanese yen and China’s Yuan. SDR Special Drawing Rights

US Dollar – 41.73 %
Euro – 30.93 %
Yuan – 10.92 %
Yen – 8.33 %
Pound Sterling – 8.09 %


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