ORDINARY DRAWING RIGHTS
SPECIAL DRAWING RIGHTS &
GLOBAL DEPOSITORY RECEIPTS
Presented by:
Saad Ahmed Khan
Mohammad Saad Habib
Source: www.imf.org
ORDINARY DRAWING RIGHTS (ODR)
Source: www.imf.org
SPECIAL DRAWING RIGHTS (SDR)
Definitions:
o SDRs are defined in terms of a basket of major
currencies used in international trade and
finance, namely: US dollar, Japanese Yen, Euro,
and Pound sterling.
o SDRs are potential claims on the freely usable
currencies of IMF members.
o SDRs have the ISO 4217 currency code XDR.
Source: www.imf.org
SDR continues….
 The amounts of each currency making up one SDR are
chosen in accordance with the relative importance of the
currency in international trade and finance.
 The determination of the currencies in the SDR basket
and their amounts is made by the IMF Executive Board
every five years. The next review will take place in 2010.
 The exact amounts of each currency in the basket, and
their approximate relative contributions to the value of
an SDR, in the past were and currently are shown in the
next slide.
Source: www.imf.org
Composition of basket
(Value of 1 XDR)
Source: www.imf.org
PURPOSES OF SDRs
 SDRs are used as a unit of account by the IMF
and several other international organizations.
 SDRs were basically created to replace ‘Gold’
in large international transactions.
 It is used as foreign exchange reserves by
central banks of many countries today.
Source: www.imf.org
DETERMINATION OF SDR VALUE
 The value of one SDR in terms of United
States dollars is determined by the IMF,
based on the exchange rates of the currencies
making up the basket, as quoted at noon at
the London market.
 If London market is closed, New York market
rates are used; if both markets are closed,
European Central Bank reference rates are
used.
Source: www.imf.org
According to IMF
SDR Definition:
 The SDR is an international reserve asset, created by the
IMF in 1969 to supplement the existing official reserves of
member countries.
 SDRs are allocated to member countries in proportion to
their IMF quotas.
 The SDR also serves as the unit of account of the IMF and
some other international organizations.
 Its value is based on a basket of key international
currencies.
Source: www.imf.org
BRETTON WOODS 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
US dollar.
It is known as Bretton Woods system because
the meeting was held at Bretton Woods –
A state of United states.
Source: www.imf.org
SDR Valuation
 After the collapse of Bretton Woods system in
1973, the SDR was redefined as a basket of
currencies.
 The U.S. dollar value of the SDR is posted daily
on IMF’s website.
 Today, it is calculated as the sum of specific
amounts of the four currencies valued in U.S.
dollars, on the basis of exchange rates quoted at
noon each day in the London market.
Source: www.imf.org
SDR Allocations
Under Articles of Agreement
 The IMF may allocate SDRs to members in
proportion to their IMF quotas.
 If a member’s SDR holdings rise above its
allocation, it earns interest on the excess and
vice versa.
 The agreement also allows the cancellation of
SDRs, but this provision has never been used!
 In addition, the IMF cannot allocate SDRs to
itself.
Source: www.imf.org
Source: www.imf.org
Source: www.imf.org
INTRODUCTION TO
GLOBAL DEPOSITORY RECEIPTS
(GDR)
Source: www.imf.org
GLOBAL DEPOSITORY RECEIPTS
Definition:
A Global Depository Receipt or Global
Depositary Receipt (GDR) is a certificate
issued by a depository bank, which purchases
shares of foreign companies and deposits it
on the account. GDRs represent ownership of
an underlying number of shares.
Source: www.imf.org
What do GDRs do?
 Global Depository Receipts (GDRs) provide
investors an opportunity to reach beyond the
geographical confines of their parent country.
Recent years have seen a growing number of
emerging market countries opting to raise
capital from international investors through
issues of depository receipts.
Source: www.imf.org
Forms of GDRs Issuance
Sponsored GDRs:
 It is defined as the
issuance of GDRs by
the company itself
against its own shares
in any foreign market
to attract investors.
 It could be a set of
1 GDR = 10 Shares
Unsponsored GDRs:
 It is defined as the
issuance of GDRs by
any other individual or
a company for instance
against the shares of
any other company in
foreign market.
Source: www.imf.org
Pakistanis Entering GDR Market
 Pakistan had entered the GDR market in 1994
when Pakistan Telecom., Hub Power
Company ltd, and Pakistan Cement Limited
issued their GDRs in the American market.
 Later on, In line with global trends, Pakistan
saw a revival of GDR issues during 2006, after
a gap of more than 10 years.
 So far MCB, (OGDC), and United Bank
Limited (UBL) have successfully launched
GDRs amounting to a total sum of US$1.5
billion at the London Stock Exchange.
Source: www.imf.org
LAST BUT NOT THE LEAST…
Q/A Session
Source: www.imf.org