Hyper inflation-that which tends to get out of hand/control such that the value of money declines rapidly to a tiny fraction of its former value and eventually to almost nothing, so that a new currency has to be adopted. It is also known as runaway or galloping inflation; Uganda experienced this type of inflation during the 70s.
High and rising inflationary rate has an effect of increasing interest rates. During inflation, money loses value and lenders (such as banks and other financial institutions) have to reflect an upward adjustment on the interest charged on loanable funds (credit funds).
High and rising inflation therefore increases the cost of capital/credit and the demand for funds is largely reduced in the economy, limiting the availability of investible funds. Moreover, the limited funds available will be invested in physical facilities which appreciate in value over time. It is also possible the diversion of investment portfolio (the amount available for investment) into speculative activities away from directly productive ventures.
