SDR Interest Rate

The SDR interest rate is the rate of interest the International Monetary Fund (IMF) pays to members that hold more Special Drawing Rights (SDR) than they were allocated, and charges to members that hold fewer. It is set every week as a weighted average of short-term government interest rates in the five currencies that make up the SDR basket, and it also forms the base of the rates the IMF charges on its loans.

The rate is often abbreviated SDRi. It should not be confused with the SDR's exchange value, which is the daily price of one SDR in US dollars and other currencies. The SDR interest rate is a yield on holdings, not a price, and it moves with money market rates in the United States, the euro area, China, Japan and the United Kingdom.

Imagine a savings club where members keep their balances in a shared pot measured in a made-up unit. Members who have put in more than their share earn interest; members who have taken out more than their share pay it. To keep things fair, the club looks each week at what ordinary short-term savings pay in five big countries and averages them, giving more weight to the countries whose money makes up more of the unit.

That is essentially what the IMF does. The SDR is a unit made from five currencies, so its interest rate is built from five interest rates. When central banks around the world raise or cut rates, the SDR interest rate follows within days.

The IMF calculates the rate every Friday and applies it for the following week, beginning on Monday. It uses representative three-month instruments in each basket currency:

• The three-month Treasury bill rate for the US dollar.
• The three-month spot rate for euro area central government bonds rated AA and above, published by the European Central Bank, for the euro.
• The three-month China Treasury bond benchmark yield for the Chinese yuan, included since October 2016.
• The three-month Treasury discount bill rate for the Japanese yen.
• The three-month Treasury bill rate for the pound sterling.

Each rate is weighted by the share of its currency in the SDR's value, which depends on the fixed currency amounts in the basket and on exchange rates that day. Since October 2014 the rate has had a floor of 0.050%, and it is rounded to three decimal places.

The weekly rate is the larger of the combined market rate and the floor:

• $A_k$ is the fixed amount of currency $k$ in one SDR.
• $X_k$ is the value in SDR of one unit of currency $k$, so $A_k \times X_k$ is that currency's weight in the basket.
• $r_k$ is the three-month interest rate for currency $k$.

In the 2022 review the IMF set the starting weights at 43.38% for the dollar, 29.31% for the euro, 12.28% for the yuan, 7.59% for the yen and 7.44% for sterling; actual weights drift with exchange rates. Using those weights and hypothetical rates of 4.0%, 2.0%, 1.4%, 0.5% and 3.9%:

The combined rate of about 2.821% is above the floor, so it would be the SDR interest rate for that week.

The SDR interest rate sits at the centre of the IMF's finances:

• Interest on SDR holdings. Members holding more SDRs than their cumulative allocation receive the rate on the excess, and those holding less pay it on the shortfall.
• Remuneration. Members whose currency the IMF has lent out earn interest on their creditor positions, linked to the same rate.
• Charges on loans. The basic rate of charge on regular IMF lending equals the SDR interest rate plus a margin. A reform effective 1 November 2024 cut the margin from 100 to 60 basis points and raised the threshold for level-based surcharges to 300% of a member's IMF quota.

Because SDRs count as a reserve asset, the rate also affects the return countries earn on part of their reserves.

The SDR was created in 1969, and its interest rate was originally set well below market levels. By the early 1980s the IMF had raised it to the full combined market rate and cut the valuation basket from 16 currencies to five. After the euro replaced the German mark and French franc in 1999 the basket held four currencies, and the yuan became the fifth in 2016.

The rate tracks the global cycle of interest rates. With policy rates at or below zero in the euro area and Japan, it sat at its 0.050% floor for long stretches of 2020 and 2021, a period of widespread negative interest rates. It then rose quickly as central banks tightened in 2022 and 2023, passing 4% by late 2023, which sharply increased borrowing costs for countries with large IMF loans. For the week of 2 to 8 November 2026 the IMF set the rate at 3.093%.

The SDR interest rate is an administrative rate, not a traded one: there is no deep private market in SDR deposits, so it reflects the basket's ingredients rather than independent supply and demand. Its instruments differ across currencies in credit quality and liquidity, and the weights change only at five-yearly valuation reviews and through exchange rate movements. Critics, especially among borrowing countries, argue that tying loan charges to the rate passes rich-country monetary tightening straight on to economies already in difficulty.

• International Monetary Fund: SDR Interest Rate Calculation
• International Monetary Fund: Special Drawing Rights