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Wednesday, 2 January 2013

URV based Daily Index

Capital Maintenance in Units of Constant Purchasing Power is implemented in terms of a Daily Index as follows:

1. During low inflation and high inflation: in terms of the Daily CPI
2. During hyperinflation: in terms of a URV based Daily Index

CMUCPP is implemented during hyperinflation as follows:

a) Based on a URV based Daily Index or
b) Based directly on the daily USD freemarket exchange rate, either the official daily USD rate or the unofficial daily USD parallel rate.

The Daily CPI is based on the monthly publised CPI.

The Daily Index used during hyperinflation is based on the Unidade Real de Valor used in Brazil prior to the Real Plan in 1994. The URV was almost entirely based on the daily USD freemarket exchange rate, either the official daily USD rate or the daily USD parallel rate.

The Daily CPI is a one or two month lagged daily interpolation of the monthly published CPI. This is not useful during hyperinflation such a daily index falls very much behind the daily USD rate.





Nicolaas Smith

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