New $1 coins are stacked together during an event launching its circulation in New York
The U.S. Mint will cut off mass production of presidential $1 coins, making just enough to meet demand for collectors, Vice President Joe Biden announced at a Cabinet meeting. REUTERS

The US dollar and Japanese yen lost a part of their weighting while that of euro and British pound increased in the basket of currencies that make up the International Monetary Fund's (IMF) Special Drawing Right (SDR), the Fund said on Tuesday. Dollar's weighting was cut to 41.9 percent from 44 earlier and yen's was reduced to 9.4 percent from 11 percent. Euro is now worth 37.4 percent of SDR, up from 34 and the British unit constitutes 11.3 percent, from 11 earlier.

The valuations after the revision, which takes place once in five years, will be effective on January 1 next year.

The IMF statement also said that it will calculate the amounts of each of the four currencies to be included in the new SDR basket and issue a press release regarding the same on December 30 in accordance with the new weights. The first SDR exchange rate using the new basket will be posted on January 3.

The SDR is an international reserve asset that was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, however, the SDR was redefined as a basket of currencies.

Currency

SDR weighting w.e.f. Jan 1

Current

US Dollar

41.9%

44%

Euro

37.4%

34%

British pound

11.3%

11%

Japanese yen

9.4%

11%

SDR interest rate

The first SDR interest rate based on the new basket will be calculated and announced on January 7, 2011, and will be effective during the week of January 10-14, 2011. The SDR interest rate is determined weekly and is based on a weighted average of representative interest rates on short-term debt in the money markets.

The SDR interest rate provides the basis for calculating the interest charged to members on regular (non-concessional) IMF loans, the interest paid to members on their SDR holdings and charged on their SDR allocations, and the interest paid to members on a portion of their quota subscriptions.