An economy that experiences, or is deemed to be currently in the state of, hyperinflation. Hyperinflation is manifested by macroeconomic factors such as prices, interest and wages linked to a price index, where inflation persists unabated for a period exceeding three years, reaching a level of around 100 per cent or more. An entity operating in a hyperinflationary economy is required to express its financial statements, including comparative information, in units of the presentation currency (functional currency) standing at the end of a reporting period.

For such an entity, financial statements are restated (if originally prepared on the basis of historical costs, rather than current costs) to current units of a hyperinflationary currency on the basis of a general price index. Differences (gains or losses) on the net monetary position are routed through the income statement for the period. The results and financial position of an entity are typically, and under normal situations, expressed in its functional currency. However, after restatement, the restated statements can be presented in any currency on the basis of translation (currency translation).