Q: Recently, which one of the following currencies has been proposed to be added to the basket of IMF’s SDR?
a) Rouble
b) Rand
c) Indian Rupee
d) Renminbi
The correct answer is Option 4.
Special Drawing Right (SDR)
- It is an international reserve asset, created by the IMF in 1969.
- It is an artificial currency created to augment international liquidity.
- It is not a currency or a claim against the IMF; rather, it adds to the current reserves of IMF member nations.
- A currency must be freely useable, widely traded, and widely used in order to qualify as an SDR.
- The SDR basket is made up of the US dollar, the euro, the British pound, and the Japanese yen.
- In 2016, the Chinese renminbi (RMB) was added to the SDR basket as the fifth currency. Hence, Option 4 is correct.
- The choice was made at the IMF’s five-year assessment of the currency basket.
- The SDR currently uses a basket of five currencies as its base: the US dollar, the euro, the Chinese yuan, the Japanese yen, and the British pound sterling.
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