The International Monetary Fund (IMF) created the Special Drawing Rights (SDRs) with 16-currencies in 1969 as a reserve asset and a unit of account. In 1980, the IMF modified the composition of and weights to calculate the exchange rate on 5-currencies. This paper mainly discusses the adjustments to the composition of the SDRs and the corresponding weights in terms of the daily exchange rate from 1981 to 2022, using Markowitz's portfolio theory to calculate the changes in risk under the floating exchange rate system. This study shows that the IMF did indeed reduce the risk of exchange rate fluctuations
Relation:
Journal of Accounting, Finance & Management Strategy 19(2), p 205-232
