Uses of triangulation

For any business that uses multiple transaction currencies, there may be a maintenance advantage to using triangulation. For example, maintaining the exchange rates between 10 currencies will involve 90 rates. However, if the business model supports triangulation through a chosen intermediate currency, only 20 rates need to be maintained. Currency relationships must exist between all possible currency combinations, regardless of the use of triangulation.

Triangulation within the Currency application is defined at the currency relationship level. Thereafter, any reference to that relationship will cause the triangulation method of conversion to be invoked. This can occur during conversions between transaction currency and base currency, account currency, or report currency.

To use triangulation, you must set up three relationships:

• From the source currency to the target currency with no exchange rate.

• From the source currency to the intermediary currency with a set exchange rate, and a set translation rate, if applicable.

• From the intermediary currency to the target currency with a set exchange rate and a set translation rate, if applicable.