Exchange Rates 

Definition

Relationship between two currencies.

Exchange rates are used to translate an amount into another currency.

Use

You define exchange rates in the system for the following purposes:

  • Posting and Clearing

To translate amounts posted or cleared in foreign currency, or to check a manually entered exchange rate during posting or clearing.

  • Exchange Rate Differences

To determine gains or losses from exchange rate differences.

  • Foreign Currency Valuation

To valuate open items in foreign currency and foreign currency balance sheet accounts as part of the closing operations.

You define exchange rates in Customizing under General Settings ® Currencies ®

Enter Exchange Rates.

Exchange rates are defined at client level and therefore apply for all company codes.

Structure

For each foreign currency, specify the exchange rate in the local currency in the system.

In addition, the following specifications apply for each exchange rate:

  • You must specify an
exchange rate type.
  • You can set time restrictions for the exchange rate, in order to take exchange rate fluctuations into account, for example.
  • Use the validity date to specify the date from which the exchange rate should apply. The system then refers to either the posting date or the translation date and uses the current exchange rate from the system.

    • You can use either direct or indirect quotation to specify exchange rates. For more information, see
    Direct and Indirect Quotation of Exchange Rates .
  • You must specify the relationship of the exchange rate, for example, USD/DEM exchange rates are normally specified 1:1, ITL/DEM exchange rates in the relationship 1000:1.
  • If you maintain your exchange rates on a daily basis, you should delete the exchange rates that you no longer require from the system, so that there are not too many entries in the system.

    Integration

    You do not have to enter all exchange rates. There are various tools you can use to automatically determine other exchange rates from existing ones.

    You specify the tool to be used for each exchange rate type. The following tools are available:

    • Inversion

    Inversion is the process of calculating the opposite rate from a defined exchange rate.

    Inversion is not permitted for exchange rate type M (average rate), since the opposite rate calculated would not be sufficiently precise.

    SAP recommends using the reference currency and exchange rate spread as tools.

    Reference Currency
  • Exchange Rate Spread