Follow Up Currency Exposure

This document explains how you create a report showing the currency exposure for each currency, that is, the exchange rate trend.

You do this on a regular basis as part of the company's risk management routines.

Outcome

Your foreign currency balances are re-calculated to display the latest currency value in local currency amount.

Sub-ledger Report

The following information is presented per currency:

  • Total balance, that is, the original booked value in currency amount per sub-ledger
  • Future rate agreement balance, that is, the total value of invoices connected to future rate agreements expressed as a currency amount per sub-ledger. The value is based on the exchange rate of the agreement.
  • Index, that is, a percentage expressing the share of invoices connected to a future rate agreement compared to the total balance per sub-ledger
  • Net values indicating the difference between the accounts receivable and accounts payable values
  • Net local amount, that is, the booked net value in local currency, including invoices connected to future rate agreements
  • Simulated net local amount, that is, the amount calculated based on the simulation exchange rate type selected, expressed in local currency
  • The profit or loss value, expressed in local currency.

General Ledger Report

The following information is presented, either per account or per currency, depending on the report layout selected:

  • The original booked amount as a currency amount
  • Recorded amount, that is, the same value in local currency
  • Simulated amount based on the simulation exchange rate type selected, expressed in local currency
  • The profit or loss value, expressed in local currency.

Use the outcome to:

  • Take action to increase exchange rate gains or to prevent losses, for example by using future rate agreements or a different currency
  • At period end, create a voucher for the profit/loss value in 'Unrealized Exchange Rate Difference. Update' (GLS160).

Before you start

  • Exchange rate types must be defined and connected to updated exchange rates in 'Exchange Rate Type. Open' (CRS056) and 'Exchange Rate Type. Open per Currency' (CRS059).
  • The department responsible (usually the Treasury department) has indicated which exchange rate type to use for the reports.

Follow These Steps

  1. Start 'Currency Exposure. Print AR/AP' (RMS560/E) or 'Currency Exposure. Print GL' (RMS565/E).

  2. Select the date up to which the currency exposure should be displayed.

  3. Enter a currency or a range of currencies to include. (To include all currencies, leave the currency fields blank.) For the general ledger report, select an account or a range of accounts as well (optional).

  4. To display the total exposure in local currency at simulated exchange rate, select an exchange rate type (required).

  5. Enter a report text, if needed, and select report layout:

    • For the sub-ledger report, only report layout 1 is available
    • For the general ledger report: 1 = Per account and currency; 2 = Per currency and account.

  6. Press Enter to create the report.

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