Understanding the Inverse Method

The inverse method is a calculation method that uses the inverse (reciprocal) exchange rate for the multiplier and divisor when converting amounts from one currency to another. The exchange rate of the multiplier and divisor are the reciprocal, or opposite, of each other. The inverse method multiplies or divides the foreign amount by the exchange rate to calculate the domestic amount.

To convert amounts from one currency to another using the inverse method, you set up from and to currency relationships and a multiplier and divisor exchange rate for each relationship. You specify whether to use the multiplier or divisor conversion method when converting amounts. You can specify the divisor conversion method when converting to a currency and the multiplier conversion method when converting from a currency, or vice versa. The only restriction is that you cannot use the inverse method in combination with the triangulation method.