IMF sets new SDR currency weights, no expansion

Published 11/15/2010, 10:53 PM
Updated 11/15/2010, 10:56 PM

WASHINGTON, Nov 15 (Reuters) - The International Monetary Fund on Monday altered the basket of currencies comprising the IMF Special Drawing Right but did not open it to any new currencies.

The IMF shifted a little away from the U.S. dollar and the Japanese yen and gave more more weight to the euro and pound in determining new currency weights for the SDR, which has been mentioned as a potential future global reserve currency.

"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 IMF said in a statement.

There had been speculation that the IMF could expand the SDR basket to include the Chinese yuan , in an acknowledgment of China's rising clout in the global economy.

In a review completed this month, the IMF concluded that the SDR should be weighted at 41.9 percent U.S. dollar, 37.4 percent euro, 11.3 percent British pound and 9.4 percent Japanese yen, the IMF said.

In a review five years ago, the agency concluded that the SDR would be weighted at 44 percent U.S. dollar, 34 percent euro, 11 percent yen and 11 percent pound.

The SDR, created by the IMF over 40 years ago to serve as an international reserve asset, usually is reviewed every five years. Its value is based on a basket of "freely usable" currencies.

Discontent with a weakening U.S. dollar has sparked interest in finding alternatives to supplant the greenback's dominant role in the global economy, putting a fresh focus on SDRs.

China is now the world's second-largest economy, although its currency is not convertible on the capital account and therefore it is barely used outside China. (Writing by JoAnne Allen; Editing by Kim Coghill)

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