IMF Lowers Dollar, Yen Weights in Its SDR Valuation Basket, Increases Euro - But still no Gold or Yuan

Bloomberg:

By Candice Zachariahs
Nov 15, 2010 6:12 PM ET

The International Monetary Fund reduced the weighting of the U.S. dollar and the yen and increased that of the euro in its Special Drawing Rights valuation basket after its regular five-year review.

The value of the SDR, which the IMF created in 1969 to supplement its member countries official reserves, will continue to be based on a basket of currencies comprised of the dollar, euro, yen and pound, the fund said in an e-mailed statement. UBS AG, the world’s second-largest foreign-exchange trader, said in June that the fund may include the Australian and Canadian dollars in the SDR basket this year, boosting demand for the commodity-backed currencies.

“There’s a long-term trend towards less U.S. dollars and more euro in terms of where central banks are putting their reserves, and this is consistent with that,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “There was some talk of the IMF putting in other currencies like the Aussie, but they’ve kept to the big four.”

The greenback’s weighting declined to 41.9 percent compared with 44 percent after a 2005 review, the fund said in its statement dated Nov. 15. The euro’s share rose to 37.4 percent from 34 percent. The yen’s fell to 9.4 percent from 11 percent, while the pound was little changed at 11.3 percent. SDRs are the Washington-based lender’s unit of account.

The new valuations will be effective Jan. 1, the fund said.