The IMF created Special Drawing Rights (SDRs) in 1969 to support the Bretton Woods fixed exchange rate system due to inadequate reserves of gold and U.S. dollars. SDRs serve as an international reserve asset issued by the IMF and their value is based on a basket of four major currencies that can be exchanged for other currencies. Exchange rates are determined by the demand and supply of currencies in the foreign exchange market. The equilibrium exchange rate is where the demand for a currency equals the supply. Factors like inflation rates, interest rates, income levels, government controls, and expectations can influence exchange rates by affecting either the demand or supply of currencies.