International Business 13th Edition by Donald Ball,Michael Geringer,Michael Minor ,Jeanne McNett

Exercise 10

The Asian Development Bank (ADB), a multilateral development bank owned by its 67 members whose primary goal is poverty reduction, makes its loans in SDR. As of September 2010, these loans totaled $44.3 billion, with the largest borrowers being China, Indonesia, India, Pakistan, and the Philippines. The ADB covers the exposure of its capital resources, $114.8 billion, by selling into the forward market the currencies that make up the SDR basket. Why would the ADB hold SDR instead of dollars or euro? What are the currency amounts that make up the SDR? To learn more about the SDR basket, visit http://imf.org/external/np/fin/data/rms_sdrv.aspx.