Defining Currency Quotations

This section provides an overview of currency quotations and discusses how to maintain currency quotation methods.

Page Name	Definition Name	Usage
Currency Quotation Method Page	CURR_QUOTE_PNL	Set up and maintain a currency quotation method for each from currency and to currency pair.

PeopleSoft software supports direct and indirect rate quotation, quote units, and triangulation. These options provide flexible and accurate tools that enable you to convert and manage multicurrency operations.

The currency quotation method controls how a stored rate is displayed and how an entered rate is interpreted and stored in the database. You set up and maintain a currency quotation method for each from currency and to currency pair.

You do not typically maintain rates online for currency pairs that triangulate. Instead, the Cross-Rate/Triangulation Generation SQR determines the cross rate by using the rates between the from currency and the reference currency, and between the reference currency and the to currency.

Currency quotation methods must be set up correctly to yield the desired triangulation results.

To define currency quotations, use the Currency Quotation Method component (CURR_QUOTE_PNL).

Note: Define currency quotation options before you enter the rates and before you calculate the rates.

Use the Currency Quotation Method page (CURR_QUOTE_PNL) to set up and maintain a currency quotation method for each from currency and to currency pair.

Navigation:

Set Up Financials/Supply Chain > Common Definitions > Currency > Currency Quotation Method > Currency Quotation Method

Rate Quotation Basis

Field or Control	Description
Direct	Determine whether you want the rates for a currency pair quoted directly. For example, in converting United States dollars (USD) to Swiss francs (CHF), a direct quote would indicate that USD 1 = CHF x.xxxx. In this case, Swiss francs are quoted directly against the United States dollar.
Indirect	Determine whether you want the rates for a currency pair quoted indirectly. For example, in converting United States dollars (USD) to Swiss francs (CHF), an indirect quote would indicate that USD x.xxxx = CHF 1.
Quote Units	Sometimes called scaling factors, these preserve decimal position. You can enter any value in this field, although quote units generally are on a scale of 10 (such as 10, 100, 1000). Quote units are typically used when one unit of a currency is many multiples of another currency. The default value for this field is 1.
Auto Reciprocate	Select this check box to have the system automatically create or update the rate for the reciprocal currency pair whenever an exchange rate is added or updated. For example, when you enter a new USD to GBP rate, the GBP to USD rate is updated automatically. You can only auto-reciprocate currency pairs for which you established quotation methods. The check box is selected by the system as a default.

Note: Currency pairs that triangulate must be classified as either direct or indirect to be used in displaying the calculated cross rate. Two fields store the rate conversion factor—RATE_DIV and RATE_MULT. The currency conversion formula is always: (From currency ÷ RATE_DIV) × (RATE_MULT) = To currency

Triangulation Options

Select the Triangulate check box to have the system convert two currencies through a third currency (the reference currency). Triangulation is used in hyperinflationary environments where all conversions to the local currency are done through a more stable currency such as USD. It is also used to convert a currency that participates in the euro. All participating currencies are quoted directly against the euro (EUR) when the euro is replacing a currency and the currency and the euro adopt a fixed exchange rate. When euro completely replaces the currency, the currency no longer exists and is no longer quoted.

For example, assume that euro participating currency (EPC) represents the currency of some new member of the European Monetary Union. To convert from USD to an EPC with triangulation, you perform two conversions:

Convert the USD amount to the reference currency using the appropriate triangulated rate.

The triangulated rate uses the USD to EUR component of the USD to EPC triangulated rate that is stored in RATE_DIV.
Convert the reference currency to EPC using the prescribed fixed exchange rate.
The exchange rate uses the EUR to EPC component of the USD to EPC triangulated rate that is stored in RATE_MULT.

Typically, you do not maintain triangulation rates manually. Instead, you process these and all rates through the Cross/Reciprocal Rate Calculator process.

Select a reference currency through which the from currency code currency will be converted. When the system converts USD to EPC using triangulation as in the example, the reference currency is the EUR.

There are three exchange rates to consider for triangulated currency pairs:

The rate between the from currency code and reference currencies.
The rate between the reference and the to currency code currencies.
The cross rate between the from currency code and to currency code currencies.

Primary Visual Rate

Select one of the three conversion rates as the primary rate that appears on primary pages and reports.

Cross Rate

Click the Allow Override check box to enable you to override the cross rate for a triangulated currency pair. If this option is deselected, you can only change the components of the triangulated rate.

Recalculate

If you click the Allow Override check box, you must maintain triangulation accuracy by specifying which currency pair the system should use to recalculate if the cross rate is overridden.

Automatic Reciprocation of Quote Methods

The Currency Quotation Method page automatically reciprocates itself. For example, if you define the conversion of USD to CHF as indirect, this record is automatically created to indicate a quote method of direct. If you change the quote method on the CHF to USD record, the USD to CHF record updates automatically.

Using the conversion of USD to CHF as an example, this table shows each possible field value and its corresponding reciprocal value:

Field	Value (for USD to CHF)	Reciprocal Value (for CHF to USD)
Quotation Basis	Direct Indirect	Indirect Direct
Quote Units	Any valid value	Same value
Rate Decimal Positions	Default	Default
Auto Reciprocate	Yes No	Yes No
Triangulate	Yes No	Yes No
Reference Currency	Any valid value	Same value
Primary Visual Rate	From - To (USD - CHF) From - Ref (USD - EUR) Ref - To (EUR - CHF)	From - To (CHF - USD) Ref - To (EUR - USD) From - Ref (CHF - EUR)
Cross-Rate Allow Override	Yes No	Yes No
Cross-Rate Recalculate	From - Ref (USD - EUR) Ref - To (EUR - CHF)	Ref - To (EUR - USD) From - Ref (CHF - EUR)