Exchange Rate

jyotsnas · 2003-07-16

Hi

In Navision Currency factor concept is used for inter-currency transactions. Can anybody tell me whats its significance over storing and using Exchange rate directly as it is ?

Regards
Jyotsna

eromein · 2003-07-16

if I understand you question correctly you want to know why there is a startdate in the factor table.

This is for "old" transactions in the system that have to user the "old" rate while new transaction have to user the new rate.

GoMaD · 2003-07-16

The Start Date is also used when you run the "Adjust Exchange Rate" batch from the General Ledger -> Periodic Activities menu.

This batch also uses the field "Adjustment Exch. Rate Amount" field from the "Currency Exchange Rates" table

Adjustment Exch. Rate Amount Field
The Currency Exchange Rate Table

You use this field and the Relational Adjmt Exch Rate Amt field to enter amounts that the program uses to calculate exchange rates that will be used by the Adjust Exchange Rates batch job. This batch job uses the adjustment exchange rate to make exchange rate adjustments (gain and loss entries) to G/L, customer, vendor and bank entries. The amount you enter in this field is relevant for the currency in the Currency Code field.

The following example shows how you can enter exchange rate amounts in the Currency Exchange Rates window. Note that the blank code in the Relational Currency Code field indicates LCY:

Currency Code USD
Relational Currency Code
Adjustment Exch. Rate Amount 100
Relational Adjmt Exch Rate Amt 64.8824

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

You define the period for which this exchange rate is valid in the Starting Date field. The exchange rate on this line is valid from the date in the Starting Date field on this line until the date in the Starting Date field on the next line.

Attention
If you post in an additional reporting currency, you must retain all the exchange rate amounts you enter in the Currency Exchange Rates window for this currency.

I hope this helps, if not download the Financial Management manual from the partner guide. It is quite large but it helps alot when you want to know something more about these problems.

Greetings

jyotsnas · 2003-07-16

Thanks for ur replies guys... but my question is different.

In navision, the exchange rates are stored in currency exchange rate table. Whenever i punch in a transaction in that currency, a factor is calculated and stored internally. This factor is called Currency factor.

I dont understand why is this factor used internally instead of using the exchange rate value directly.. I want to know the significance of this mechanism.

Regards
Jyotsna

GoMaD · 2003-07-16

One of the reason is the performance Issue.

In this manner it is not neccessary to call the exchange rate table and do a query every time the exchange rate is needed.

It is also usefull to have this field in the table when you want to know which currency factor was used when the record was created.

There are also other reasons.

Greetings

jyotsnas · 2003-07-16

Thanks

I understand Performance Issue reason. Agreed that the exchange rate table will not have to be referred everytime. But even then, why is factor stored internally ? Exchange rate also could have been stored directly instead of factor ......

Regards
Jyotsna

eromein · 2003-07-16

I think in the past people changed the currency rates instead of adding new ones.

Therefore iho they saved the rate internaly to be sure the right rates where used in calculation.

I think this is a better reason then performance. I don't think getting a rate is done that often and takes that long.

StephenG · 2003-07-16

This field was introduced in Ver2.00.

I think it was to help out with the Triangulation of European currencies and the Euro.

Eg.
LCY = GBP
ATS = Austrian Schilling

GBP to EURO = 0.6458
ATS to EURO = 13.9504

Currency Factor = 21.601

GoMaD · 2003-07-16

in pre-euro time, EMU times, when your local currency was, for example, Belgian Francs (BEF) and your customers currency rate was US dollar (USD), the calculation of the factor was not done directly between BEF and USD but first from BEF to Euro and then from Euro to USD and the result of this calculation was the factor.

Now in Euro times this isn't the case anymore. So I agree that it is something that is inherited from the "early years".

Greetings

jyotsnas · 2003-07-16

Thank You People.....
That was a great session with you all.

Jyotsna

Luc_VanDyck · 2003-07-16

Triangulation is still used in EURO-countries. eg. to convert from USD to CHF, you first go from USD to EUR, and then from EUR to CHF.

jyotsnas · 2003-07-16

Then , how does factor eases this calculation ??

Jyotsna

craigbarbs · 2003-07-19

There are other uses for the currency factor. If one were to post a credit memo relating to an invoice of an earlier date, one may expect to use the same currency rate. By having this factor, it is thus possible to over-ride the actual exchange rates. Also, sometimes, one could perform an FCY transaction at an agreed exchange rate, which may differ from the one stored in Navision.

Exchange Rate

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