Foreign Currency Valuation - SAP Documentation

Use

This step determines the gains and losses resulting from changes in the exchange rate.

Integration

The exchange rate valuation is supported for the following product categories:

Loans:	300 Mortgage 310 Borrower’s note loan 320 Policy loan 330 General loan
Securities:	010 Stock 020 Investment certificate 030 Subscription right 040 Bond 041 Bond with redemption schedule 060 Warrant bond 070 Convertible bond 111 Index warrant 112 Equity warrant 113 Currency warrant 114 Bond warrant 160 Shareholding
Money market transactions:	510 Fixed-term deposit 520 Deposit at notice 530 Commercial paper 540 Cash flow transactions 550 Interest rate instrument
Foreign exchange:	600 Foreign exchange
Derivatives:	610 Cap/Floor 620 Swap 630 FRA 740 Forward bonds 760 OTC options 700 Futures (only the variation margin can be valuated)

Features

Determining the write-up / write-down amount in a foreign currency:

The purchase value (= acquisition value) and the book value of the position are determined in position and valuation currency.

The new book exchange rate is determined by comparing the following exchange rates in accordance with the rules defined in the position management procedure.

Current market exchange rate

Old book exchange rate

Acquisition exchange rate

The foreign currency write-up / write-down amount in valuation currency is determined as follows:

(Book value of the position in position currency x New book exchange rate) - (Book value of the position in position currency x Old book exchange rate) = Foreign exchange write-up/write-down amount in valuation currency

This graphic is explained in the accompanying text.

This valuation step can only supply a foreign currency write-up or write-down amount in valuation currency.

Whereby:

Book value of the position in position currency

This is either the new book value of the position in position currency or the old book value of the position in position currency depending on whether or not a security valuation has already been carried out.

See also:

Valuation of Capitalized Costs

Flows are generated with the write-up or write-down amounts.

If the +/- sign has changed compared to the totals of previous flows, a clearing flow is generated if the Clear Gains/Losses indicator is set in the definition of the foreign currency valuation procedure in Customizing under Transaction Manager → General Settings → Accounting → Parallel Valuation Areas → Settings for Position Management → Key Date Valuation → Define Foreign Currency Valuation Procedure. If the result of the valuation is that the position has to be written down, for example, and write-up flows already exist, the system would generate one flow to clear the write-ups, and one flow for the remaining write-down amount. The same applies if a write-up offsets former write-downs. The flows always have 0 as the amount in position currency.

This valuation step can generate reset flows.