Abstract
Recognising the superior benefits of risk reduction associated with using portfolio of currencies relative to a single currency (US dollar), this paper shows that, ceteris paribus, a minimum-variance portfolio of currencies in the developed world has weights that strikingly mimic those currencies making up the SDRs. This means that discounting the benefits of using the US dollar derived mainly from prevailing geopolitics and oil trade infrastructure, SDRs basket would be the viable alternative to use in oil pricing in terms of its superior risk reduction benefits.
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