SDR was created by the IMF in 1969 as a supplementary international reserve asset. Technically SDR is not a currency. The value of SDR is based on the basket of the four major currencies – US Dollar, Euro, UK Pound and Japanese Yen. From 1st October 2016, Yuan will be the fifth currency in the basket. The IMF members who hold the SDR are allowed to freely exchange their SDR with any of the four currencies in the IMF’s basket. Generally countries exchange their SDR with four major currencies to meet their trade needs with other countries.