What is SDR and how much is it ?

Update date:
21 May 2024
Date of publication:
15 Apr 2024
Reading time: 2 minutes

Table of contents:

SDR - is a special unit of account created by the International Monetary Fund. The value of the SDR is calculated on the basis of a currency basket of the world's major currencies and its exchange rate fluctuates all the time.

The exchange rate of 1 SDR is PLN 5.29 

Current SDR exchange rate to check here:link

What is the purpose of the SDR? 

Its main purpose is to complement the existing international monetary system by providing liquidity and serving as a stable unit of account between member countries. The SDR is not a currency in its own right, but rather a basket of major currencies, including the US dollar, the euro, the Chinese yuan, the Japanese yen and the British pound. By establishing the SDR, the IMF aims to strengthen global financial stability, facilitate international trade and investment and promote economic cooperation among nations.

Factors influencing the SDR value

The value of SDRs, or Special Drawing Rights, is determined by a number of factors that affect the global financial system. One key factor is the economic and political stability of the individual countries that make up the SDR basket. Economic growth, effective management of public finances and low levels of inflation can all contribute to an increase in the value of the SDR. In addition, the relative stability of the exchange rates included in the SDR basket has an important impact on its value. Also, policy decisions taken by the International Monetary Fund (IMF), such as changes in the weight of individual currencies in the SDR basket, can affect its value. Finally, overall confidence in the SDR as an international reserve asset and payment instrument is important for its value. All in all, the value of the SDR is the result of complex interactions between economies, policies and global issues.

Benefits of using SDRs in the global economy

The introduction and use of Special Drawing Rights (SDRs) in the global economy brings a number of benefits. One of the most important is to increase liquidity and stability in the financial system on a global level. As an international reserve asset, the SDR complements traditional foreign exchange reserves such as US dollars and the euro. Thus, when instability in a single currency occurs, the SDR can serve as a stabiliser, allowing financial institutions and countries to use these funds to cover payment needs and maintain trade stability. In addition, the SDR is also used as a settlement tool in international trade operations, making financial flows between different countries easier and more efficient. The benefits of using SDRs are particularly evident in crisis situations, when the need for financial stability becomes crucial. Therefore, the SDR plays an important role in promoting economic and financial stability at the international level.

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