How are currency rates expressed?

A currency rate is used to convert a value in one currency into its equivalent value in another currency. Therefore, a currency conversion rate is expressed as the rate required to convert From one currency To another.

For example, you might define the following rates:

From Currency	To Currency	Rate
GBP	EUR	1.63
GBP	JPY	189.22
GBP	USD	1.44

Uwaga: When the rates are defined, they must be expressed from the pivot currency to any other valid currency. For example, in the table above GBP is the pivot currency. In addition, if the fourth and fifth currency values are in use and can be calculated from a currency other than the pivot, additional rates may need to be defined From the chosen conversion currencies To the valid Fourth and Fifth currencies. The conversion currencies are identified in Business Unit Setup.

Decimal Places

A conversion rate can be entered with up to nine decimal places. However, you can define the number of decimal places used to store the rates for the currency. If more than this number of decimal places are entered for a rate, the rate is rounded to this number of places before any conversion calculations are performed. If a rate is calculated by the system it is rounded back to this number of decimal places.

Multiply or Divide Rates

A rate is also defined as either a Multiply or Divide rate. This determines whether the From currency value is multiplied or divided by the rate entered to calculate the To currency.

For example, if a GBP-EUR rate of 1.63 has been defined (from GBP to EUR), and a sterling value is entered on a transaction, the EUR equivalent is calculated as: GBP value x 1.63.

The currency conversion process works in both directions, regardless of which way you define the conversion rate. For example, if a GBP-EUR rate of 1.63 has been defined (from GBP to EUR), and a euro value is entered on a transaction, the GBP equivalent is calculated as: EUR value / 1.63. Reciprocal rates do not need to be defined.

It is important that you define the conversion rate and Multiply/Divide indicator correctly. Therefore, it is advisable to adopt a standard for each business unit, so that all currency rates are defined as either divide or multiply rates. This avoids confusion.

Uwaga: It is particularly important that you do not change the Multiply/Divide indicator from one period to another. This can give unexpected results in some cases.