Currency Interventions
Central Banks • 10 min
Updated: October 2025
SDR interest rate (weekly): 2.798% (posted 17 Oct 2025). This is the reference rate that drives charges and remuneration on SDR positions.
Current headline example: Armenia — IMF staff reached agreement on a new 36-month Stand-By Arrangement (SBA) request alongside the sixth review of the 2022–25 SBA (statement 16 Oct 2025). Board dates matter for timing/flows.
Ongoing major programme: Ukraine — Eighth EFF review completed (30 Jun 2025), underscoring financing assurances and reform progress. Programme cadence and reviews are key trading dates.
Trader takeaway: watch Board calendars, review timetables and SDRi moves—they can shift EM FX, local bonds and USD sovereign spreads around catalyst dates.
Headquartered in Washington, D.C., U.S., the IMF (International Monetary Fund) is one of the world’s most important financial institutions. The IMF was founded in 1944 alongside the World Bank Group at the UN-convened Bretton Woods Conference. The two bodies were formed in the aftermath of the Great Depression, with the IMF idea particularly inspired by the need to prevent competitive currency devaluations witnessed during the 1930s as well as to lay the ground for future international economic cooperation. The IMF officially started its operations in December 1945 and has now grown its membership from the original 29 countries to the current 190 members as of November 2021.
The IMF initially oversaw the Bretton Woods monetary system before its collapse in the 1970s. The system mandated member countries to keep their external forex rates to within 1 per cent, with currencies tied to the Gold standard. The IMF now promotes a system of floating exchange rates, where market forces of supply and demand determine the value of currencies. In addition to enhancing exchange rate stability, the IMF has stated objectives of promoting international monetary cooperation, sustainable economic growth, high employment, international trade, and lending resources to member countries during financial turmoil.
The International Monetary Fund has over $1 trillion of resources that it is able to lend to member countries as well as to provide other services so as to meet its objectives. The IMF has two sources of its funds: quotas and loans. Quotas are its main financing source, where each member is assigned an amount that reflects its standing in the world economy. Quotas are typically reviewed every five years. The IMF can also supplement its resources via loans, with special bilateral and multilateral credit agreements in place with a group of certain members and institutions.
The IMF has its own unit of accounts known as SDR (Special Drawing Rights). SDR has been allocated the currency code XDR by ISO, but it is not quite a currency. SDR is an international reserve asset that the IMF created to supplement the official reserves of its member countries. The SDR was created in 1969, and it was initially pegged to Gold and the US dollar. But since the collapse of the Bretton Woods System in 1973, the SDR was reformulated as a basket of major world currencies.
The SDR now has 5 constituent currencies: US dollar, euro, Chinese yuan, Japanese yen, and the Sterling pound. The SDR basket is re-evaluated every 5 years, with each currency assigned a certain weighting based on its fee usability and export criteria. SDRs are allocated by the IMF to member countries and cannot be held or used by private entities. In recent years, the SDR allocations have been significantly boosted, particularly in 2009 (post-Great Recession) and in 2021 (post-Great Lockdown); and it helped IMF members navigate tricky financial and economic situations.
The Board of Governors is the highest decision-making body of the International Monetary Fund. It consists of one governor and one alternate governor representing each member country. These individuals are usually finance ministers or central bank governors of their respective countries, and they can speak authoritatively for the members they represent.
The Board of Governors meets once a year, and they have the powers to admit new members, approve quota increases and SDR allocations, amend the IMF bylaws and articles of agreement, as well as compulsorily withdraw any member.
Twenty-four of these governors are elected or appointed to serve in the IMF Executive Board, which oversees the day-to-day operations of the organisation, assisted by the IMF Staff. The IMF Managing Director chairs the Executive Board and is also the head of the IMF Staff. The IMF MD is supported by four Deputy Managing Directors.
Stand-By Arrangement (SBA)
Short- to medium-term balance-of-payments support, which can also be set up as precautionary insurance. Typical access is expressed as a share of a country’s IMF quota, with higher “exceptional access” possible in severe cases.
Extended Fund Facility (EFF)
Medium-term support for economies with deeper structural weaknesses that need longer engagement and reform timelines.
Precautionary & Liquidity Line (PLL)
For members with generally sound policies but some vulnerabilities; can address actual or potential financing needs.
Flexible Credit Line (FCL)
A pre-approved insurance line for countries with very strong policy frameworks. It can remain undrawn as a confidence signal or be used when needed.
Short-Term Liquidity Line (SLL)
A pure liquidity backstop for very strong performers facing moderate, short-lived external shocks.
Rapid Financing Instrument (RFI)
Quick-disbursing emergency support when urgent needs arise and a full programme is not yet feasible.
Extended Credit Facility (ECF)
Medium-term concessional support for protracted balance-of-payments problems.
Stand-By Credit Facility (SCF)
Short-term concessional support; can also be used on a precautionary basis.
Rapid Credit Facility (RCF)
Fast, concessional financing for urgent needs such as external shocks or natural disasters.
Resilience & Sustainability Facility (RSF)
Longer-maturity, affordable financing to help countries tackle macro-critical climate and pandemic risks that could threaten future external stability.
Quotas & Votes
A country’s quota determines how much it can access, how much it pays, and its voting power. Periodic quota reviews can increase headroom and shift governance weights.
SDRs are a reserve asset, not a currency. They’re valued against a basket, and the weekly SDR interest rate influences the cost or remuneration on members’ SDR positions.
The IMF refreshed guidance on financing assurances and sovereign arrears—including how “lending into official arrears” can proceed when good-faith engagement is demonstrated and safeguards are met. This matters for programmes where creditor coordination is complex.
The Executive Board approved the use of SDRs to acquire hybrid-capital instruments issued by prescribed holders (e.g., MDBs), with a cumulative limit of SDR 15bn to manage liquidity risk. This creates another channel to mobilise concessional/long-term finance alongside PRGT/RST.
A tiered interest-rate mechanism now applies to new PRGT lending: the poorest LICs remain at 0%, while others pay a modest—still concessional—rate. Access norms have been re-anchored at 145% of quota, with annual/cumulative limits maintained at 200%/600% (exceptional access possible).
Expect more explicit references to debt sustainability, financing assurances, and good-faith creditor engagement in staff reports and Board documents, reflecting the updated arrears/assurances guidance.
The weekly SDR interest rate (SDRi)—which influences charges and remuneration on SDR positions—stood at 2.798% in Oct 2025 and changes with global rates. Programme carrying costs and PRGT concessionality are sensitive to this.
Programme approval, on time (disbursement unlocked)
When a Board approves a new SBA/EFF as scheduled, EM FX often firms modestly, local-currency bond yields edge lower, and USD sovereign spreads compress as funding risk recedes. The effect is strongest when prior uncertainty was high and policy conditionality is seen as credible.
If a quarterly review is postponed or missed benchmarks force extra prior actions, markets typically price a higher near-term funding gap: local FX softens, USD spreads widen, and the curve can steepen as rollover risk grows. Signals of a quick remedial path can limit the damage.
A qualifying country securing a precautionary line often gets a confidence dividend: FX stabilises or appreciates, spreads tighten, and front-end yields ease as investors treat the facility like insurance against shocks. The effect is larger when market stress was building but fundamentals remain sound.
Access upsize at review (bigger buffer, tougher conditions)
When access is increased mid-programme, the signal is double-edged: stronger buffers are positive for liquidity, yet tighter conditionality can weigh on growth assets in the short run. Net price action hinges on whether the upsize addresses an external shock or a policy slippage.
A rising SDRi pushes up programme charges and SDR position costs for some members, which can nudge spreads wider at the margin and make rollover terms more sensitive to global rates. Conversely, a falling SDRi can slightly ease debt-service expectations.
Objective: turn IMF newsflow into a clear, repeatable plan across EM FX, local bonds, and USD sovereigns—with disciplined risk control.
Rehearse your three scenarios on a free demo account before trading live.
Execution tip: Avoid the first spike; let price retest your levels before committing.
IMF programmes move in steps: staff agreements, Board approvals, and periodic reviews. For upcoming decision windows and expected headlines, check the AvaTrade Economic Calendar.
The clearest moves are usually in the impacted country’s currency vs USD, broader USD sentiment proxies (e.g., majors), gold (XAU/USD) when risk appetite shifts, and US indices if global risk is affected.
Use a three-scenario plan (on-time approval, delay/slippage, access upsize/precautionary line), trade smaller size, add protective stops, and consider OCO orders around pre-planned levels. Practise first on a free demo account.
Special Drawing Rights (SDRs) are a reserve asset valued against a currency basket. The weekly SDR interest rate affects programme charges and can influence debt-service dynamics for some countries—one reason spreads and FX can react to IMF updates.
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