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

 

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