July 25, 2016
PRESS OFFICER: Raphael Anspach
Phone: +1 202 623-7100Email: MEDIA@IMF.org
On July 20, 2016, the Executive Board of the International Monetary Fund (IMF) adopted a decision amending the rounding methodology for determining currency amounts in the Special Drawing Right (SDR) basket to make it less complex and also to more closely align the currency weights with those approved by the IMF Executive Board (http://www.imf.org/external/pp/longres.aspx?id=5055). The Board decision was taken on a lapse-of-time basis. 1
As in the past, the calculated currency amounts will ensure that, on the last business day before the new SDR basket enters into effect (transition date), the value of the SDR in U.S. dollar terms is the same as the value of the prevailing SDR (same value). Moreover, the methodology ensures that the weight of each SDR basket currency, evaluated at the average exchange rates for the three-month period ending on the transition date, corresponds to the weight approved by the IMF Executive Board at the time of concluding the SDR Valuation Review ( Press Release No. 15/543).
Under the new rounding methodology, currency amounts will now be rounded to five significant digits based on the sixth significant digit. If necessary to ensure the same value on the transition date of the old and new SDR in terms of the U.S. dollar, an adjustment will be made to the amount of the U.S. dollar, the currency against which the values of the other SDR basket currencies are determined. In the unlikely event that calculations do not yield the same value for the SDR in five significant digits, the same steps will be followed but rounding will be to six significant digits based on the seventh significant digit.
The amended methodology allows final currency amounts to produce currency weights that are very close to the weights adopted by the IMF. It also eliminates the complex iterative rounding procedure used under the previous methodology, making currency amount calculations easier to replicate for SDR users and market participants.
Illustrative Currency Amounts in the New SDR Basket
At the conclusion of the regular five-yearly review of the method of valuation of the SDR on November 30, 2015, the IMF decided that five currencies (the
U.S. dollar, euro, Chinese renminbi, Japanese yen, and pound sterling) will comprise the SDR basket effective October 1, 2016 (Press Release No. 15/540; Press Release No. 15/543). Final currency amounts for the new valuation period will be
determined and published on September 30, 2016 (transition date), based on exchange rates from July 1, 2016 through September 30, 2016.
The IMF publishes illustrative currency amounts in the lead up to the transition date to assist SDR users in preparing for the changeover to the new SDR valuation basket. The table below shows illustrative currency amounts based on the exchange rates for the three-month period up July 25, 2016. Updated illustrative currency amounts will be published on a weekly basis every Monday through September 26 (except for one publication on Tuesday September 6, as September 5 is an IMF holiday), with the final currency amounts to be published, as noted above, on September 30, 2016.
| Currency | Percentage Weights1 | Base Period Average Exchange Rates (BEX)2 | Transition Date Exchange Rates (TEX) on July 25, 2016 |
Illustrative Currency Amounts3 | U.S. Dollar Equivalents on July 25, 2016 |
|---|---|---|---|---|---|
| U.S. dollar | 41.73 | 1 | 1 | 0.58545 | 0.585450 |
| Euro | 30.93 | 1.12234 | 1.0989 | 0.38662 | 0.424857 |
| Chinese yuan | 10.92 | 0.151498 | 0.149530 | 1.0112 | 0.151205 |
| Japanese yen | 8.33 | 0.00939707 | 0.00940822 | 12.436 | 0.117001 |
| Pound sterling | 8.09 | 1.40700 | 1.3131 | 0.080665 | 0.105921 |
| SDR1 = US$ 1.384434 | |||||
|
Source: IMF Finance Department 1/ See Decision No. 15891-(15/109), adopted on November 30, 2015. 2/ Calculation based on average exchange rates for the three-month period up to July 25, 2016. 3/ An adjustment of 0.00001 was applied to the U.S. dollar currency amount to meet the equality condition. See Currency Amounts in the SDR Basket - Proposed Changes to the Rounding Methodology (July 13, 2016) for details of calculation and rounding of currency amounts. 4/ The value in U.S. dollars of one SDR, rounded to six significant digits. |
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Background information:
Currency amounts refer to the number of units of each currency in the SDR basket and play a central role in the daily valuation of the SDR. They are determined on the transition date and remain fixed over the five year SDR valuation period. Each business day during the valuation period, the value of the SDR (in U.S. dollars) is calculated as the sum of the currency amounts, valued at daily exchange rates of the currencies against the U.S. dollar.
1 The Executive Board takes decision under its lapse-of-time procedure when the Board agrees that a proposal can be taken without convening formal discussions.
