To use the SCB as a benchmark for measuring indexes or goods:

1. On January 4th 1988, 1 SCB = 1 USD

2. First, determine a “base” currency that you will use as your starting point. If you live in the UK, for example, you might choose the pound, or the yen if you’re in Japan:

                                                       (BCscb(y) *4)
BCscb(t) =      ___________________________________________

                    (USDt/USDy + SGDt/SGDy + CHFt/CHFy + NZDt/NZDy)  

Example: EWI uses the US dollar as its base currency. For us, the formula is:

                                                   ( USDscb(y) *4)
USDscb(t) =   ___________________________________________

                    (USDt/USDy + SGDt/SGDy + CHFt/CHFy + NZDt/NZDy)

3. Next, convert your base currency in SCB terms into the native currency in SCB terms of the index or good you are measuring.  For example, if you are assessing the Mexican Bolsa in SCB terms, your native currency is the Mexican peso. (Note: If the base currency and native currency are the same, skip this step):

                                                NC * BCscb = NCscb

• NC = Native currency in base currency terms, with
• The native currency as the numerator and
• The base currency as the denominator (caution: quote conventions vary by currency, i.e., some currencies are traditionally quoted as native currency units per US dollar, and others are quoted in the reverse. Research carefully before completing this step.)
• NCscb = Native currency in SCB terms
• NCscb (Day 1) = i.e., the starting value of the SCB and the NC in SCB terms are equal.
• NCscb (Jan 1, 1988) is pinned to be equal to NCUSD on January 4th, 1988
• Day 1 = January 4th 1988

4. Finally, express your index or good in SCB terms:

                                                IG * NCscb = IGscb

• IGscb = Index or good in SCB terms
• IG = Index or good in Native Currency

To determine how the SCB has performed in terms of another currency:

 1. Decide which currency you will use to measure the SCB’s performance. We’ll call this our “base” currency.

 2. Express the SCB in base currency terms using this formula:

 

                    SCB bc(y)

SCBbc(t) =  _________* (USD(t)/USD(y)+SGD(t)/SGD(y)+CHF(t)/CHF(y)+ NZD(t)/NZD(y))

                             4

BC = Base currency
SBCbc = SCB in BC terms
(t) = today
(y) = yesterday
SBCbc (Day 1) = 1.0
That is, the starting value of both the BC and the SCBbc is 1.0.
In this application, the value of the BC does not change over time. Rather, it is the currency by which you measure the SCB that does change.
Day 1 = Any starting date, e.g., 1 January 1988 or 1 January 1971
All currencies are expressed in terms of the base currency:
• SGD = Singapore dollar expressed in BC terms
• CHF = Swiss franc expressed in BC terms
• NZD = New Zealand dollar expressed in BC terms
• USD = US dollar expressed in BC terms

If you have questions, direct them to deepakg@elliottwave.com.