Special Drawing Rights (SDRs)

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves.

How and why did the SDR originate?

International demand for liquidity increase during 1960 and the gold  is not suitable due to small and How and  erratic supply

experts came to solution to create a synthetic reserve asset to supplement the supply of gold.

Its price was fixed in terms of gold at exactly the same level as $1, so that SDR1 = $1.

The first SDRs, 3 billion of them, were created and allocated among members of the IMF in proportion to their quotas on January 1, 1970

The rationale for making, by the standards of the time, such a sizeable allocation was the prospect of a reserve shortage as a result of stringent US monetary policy in 1969.

Further allocations of approximately SDR 3 billion a year were agreed  simultaneously for the following two years:

The actual allocations were SDR 2.9 billion in 1971 and SDR 3.4 billion in 1972. At the end of that process the SDR constituted some 9.5 percent of the world’s stock of nongold reserve assets..

Current system for calculation SDR

weights used for calculating the were 44 percent for the US dollar, 34 percent for the euro, and 11 percent each for the Japanese yen and the pound sterling.

currently 1SDR = Rs.95

Source – Peterson institute for economic studies