Currency exchange-rates

The currency exchange-rate is the factor by which an amount in a different currency is multiplied to calculate the amount in the currency base. In a single or dependent currency system, the currency base always equals the reference currency. In an independent currency system, the currency base is one of the home currencies. In a standard currency system, the local currency is the default currency base; the other home currencies, and sometimes the reference currency can serve as currency base.

transaction currency amount * currency exchange-rate = currency base-amount

Rate factor

The rate factor (for example, 100 or 10,000) indicates how many units of a given currency are equal to one unit of the base currency multiplied by the currency rate.

If the currency rate is expressed in the base currency, the amount in the currency to be converted is divided by the rate factor before the currency rate is applied. This option is useful for conversion to currencies with very small values, such as the Colombia peso.

For example, instead of defining that COP 1 = 0.000346 EUR you can define that COP 10,000 = EUR 3.46 with the rate factor = 10,000.

Currency rate registration

Currency rate registration is different in dependent and independent multicurrency systems. This has an effect on the conversion rules for rates and rate factors, described in "Conversion Rules." This figures shows which rates are defined in single, dependent, and independent currency systems.

Currency rates in a standard currency system

In a standard multicurrency system, currency rates must be defined between all foreign currencies and all home currencies of the financial companies of a group. Additionally, rates between the reference currency and the foreign currencies, and between the local and the reference currency, must be set up.

Currency rates in a single currency system

In a single currency system, the currency rates must be defined between the transaction currencies and the reference currency, which is the common local home currency for all companies.

Currency rates in a dependent multicurrency system

In a dependent multicurrency system, these currency rates must be defined:

• The rates between the transaction currencies and the reference currency, which is one of the home currencies in all financial companies.
• The rates between the reference currency and each of the other home currencies.

No rates are used between the transaction currency and the other home currencies. The other home currencies are only related to the reference currency and are therefore dependent on that currency.

Transaction amounts are first converted into the reference currency and then from the reference currency into each of the other home currencies.

Currency rates in an independent multicurrency system

In an independent multicurrency system, the currency rates must be defined between the transaction currencies and each of the home currencies, including the reference currency. In an independent system, the reference currency equals the local currency.

Transaction amounts are converted into the reference currency and also directly into each of the other home currencies.

• In the amount calculations, no rates are used between the reference currency and the other home currencies. The home currencies are all related to the transaction currency and are therefore independent of each other.