Exchange Rate confusion

Mike_Heffner · 2007-10-08

I am trying to understand how the exchange rate table works and thought I had it until I ran across the following in the help screens.

"In this example, the adjustment exchange rate for USD to USD is defined as 64.8824 USD for 100 USD. The program uses the information in the Currency Exchange Rates window to calculate the adjustment exchange rate."

An exchange rate for USD to USD makes no sense to me. Is this just an anomoly in the help text, or is there some important concept that I am missing?

Thanks in advance for your help,
Mike

ufuk · 2007-10-08

I don't know your local laws but generally it is used for revaluation purposes. Let's say the currency exchange rate in the posted document is x and on the revaluation date the rate is y. You can use Adjust Exchange Rate batch job to reflect the real value of the money (the value on the posting date + amount * (y-x)) and calculate related loss or revenue.

Regards.

Ufuk

DenSter · 2007-10-08

That must be an error in the help text. You can't have an exchange rate to your own currency.

ufuk · 2007-10-08

I think an adjustment rate is applicable in inflationist economies. To protect the value of money you can revaluate the money and it reflects it's reel (actual) value (not the nominal value on x date)

We have an experience of such a case in Turkey where we multiply the nominal value of money by some indexes (adjustment currency rates in Navision can play the same role) for the non-financial assets.

Mike_Heffner · 2007-10-08

Interesting Interpretation. I don't know that we have ever revalued our currency in the US, but I know some countries have done this before.

Thanks Ufuk,

Mike

idiot · 2007-10-09

Technically speaking, the exchange rate for your own currency is one.

Exchange Rate confusion

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