With reference to ‘Special Drawing Rights (SDRs)’, consider following statements

1. India’s foreign exchange reserves include SDRs.
2. These can be exchanged for the currencies of the International Monetary Fund (IMF) member countries.

Select the correct statement.

• The Forex Reserves (‘foreign exchange reserves’) of Indian economy include foreign currency assets, gold reserves, SDRs (Special Drawing Rights) and Reserve Tranche in the IMF. Hence statement 1st is correct.
• The SDR is neither a currency nor a claim on the International Monetary Fund (IMF). Rather, it is a potential claim on the freely usable currencies of IMF members. SDRs can be exchanged for these currencies. Hence statement 2nd is correct.

By: Shubham Tiwari