IMF Determines New Currency Weights for SDR Valuation BasketPress Release No. 10/434
November 15, 2010
The Executive Board of the International Monetary Fund (IMF) today completed the regular five-yearly review of the basket of currencies that make up the Special Drawing Right (SDR) and of the interest rate on the SDR. The value of the SDR will continue to be based on a weighted average of the values of a basket of currencies comprising the U.S. dollar, euro, pound sterling, and Japanese yen. The SDR interest rate will also continue to be determined as a weighted average of the interest rates on short-term financial instruments in the markets of the currencies in the SDR basket.
With effect from January 1, 2011, the IMF has determined that the four currencies that meet the selection criterion for inclusion in the SDR valuation basket will be assigned the following weights based on their roles in international trade and finance:
U.S. dollar 41.9 percent (compared with 44 percent at the 2005 review)
Euro 37.4 percent (compared with 34 percent at the 2005 review)
Pound sterling 11.3 percent (compared with 11 percent at the 2005 review)
Japanese yen 9.4 percent (compared with 11 percent at the 2005 review)
The criterion used to select the currencies in the SDR basket remains unchanged from the 2000 and 2005 reviews: the currencies included in the SDR are the four currencies issued by Fund members, or by monetary unions that include Fund members, whose exports of goods and services during the five-year period ending 12 months before the effective date of the revision had the largest value, and which have been determined by the Fund to be freely usable currencies in accordance with Article XXX (f) of the Fund’s Articles of Agreement. The weights assigned to these currencies continue to be based on the value of the exports of goods and services by the member (or by members included in a monetary union) issuing the currency and the amount of reserves denominated in the respective currencies that are held by other members of the IMF. These initial currency weights are rounded to one decimal place, rather than to the nearest whole percentage point as in past reviews.
The amounts of each of the four currencies to be included in the new SDR valuation basket will be calculated on December 30, 2010 in accordance with the new weights, and will go into effect on January 1, 2011. The calculation will be made on the basis of the average exchange rates for these currencies over the three months ending on that date in such a manner as to ensure that the value of the SDR will be the same on December 30, 2010 under both the revised valuation and present valuation baskets.
SDR Interest Rate
The IMF also reviewed the method for determining the SDR interest rate and decided to continue to set the weekly interest rate on the basis of a weighted average of interest rates on short-term instruments in the markets of the currencies included in the SDR valuation basket. The interest rate on the three-month Treasury bills of the United States, United Kingdom, and Japan, and the three-month Eurepo rate will continue to serve as the representative interest rates for the U.S. dollar, pound sterling, Japanese yen, and euro, respectively.
A press release providing the final currency amounts in the new SDR valuation basket to take effect on January 1, 2011 will be issued by the IMF on December 30, 2010. The first SDR exchange rate using the new basket will be posted on January 3, 2011. The first SDR interest rate based on the new basket will be calculated and announced on January 7, 2011, and will be effective during the week of January 10–14, 2011. Further information on the SDR can be found on the IMF's website (http://www.imf.org/external/fin.htm).
As a service to the users of SDRs, the Fund will project the currency amounts in the revised basket beginning December 8, 2010, and update these projections every week for the remainder of the year and post them on the IMF's website (www.imf.org). As the currency amounts will be based on a three-month average of exchange rates, these projections will tend to iterate toward the final effective amounts, thereby keeping users informed of the likely final currency amounts in the new basket that takes effect on January 1, 2011.