Understanding Conversion Factor Fields and the Visual Rate
Support for both direct and indirect currency quotations creates a potential for complex currency conversion formulas in applications. To avoid excess conditional logic in the conversion formula, the PeopleSoft system provides two fields to store the conversion factor, RATE_MULT and RATE_DIV. The rate that you enter is called the visual rate. This visual rate is generally stored in either RATE_MULT or RATE_DIV, based on the quote method. The quote units are stored in whichever field does not contain the visual rate. As a result, the formula for currency conversion remains consistent:
(from-currency / RATE_DIV) × RATE_MULT = to-currency
This formula is also used for currency conversion in PeopleCode programs for online processing, as well as in SQR and COBOL processes.
The following table shows a few basic examples of how visual rates are transformed into RATE_MULT and RATE_DIV, according to the quote method and quote units for the currency pair:
| Currency Pair | Quote Method | Quote Units | Primary Visual Rate | RATE_MULT | RATE_DIV |
|---|---|---|---|---|---|
|
USD to GBP |
Indirect |
1 |
1.6 |
1 |
1.6 |
|
GBP to USD |
Direct |
1 |
1.6 |
1.6 |
1 |
|
DEM to CHF |
Indirect |
100 |
119.335 |
100 |
119.335 |
|
CHF to DEM |
Direct |
100 |
119.335 |
119.335 |
100 |
|
USD to Euro |
Indirect |
1 |
1.25 |
1 |
1.25 |
|
Euro to FRF |
Direct |
1 |
6.8 |
6.8 |
1 |
|
USD to FRF |
Direct/Triangulate/Euro |
1 |
5.44 |
6.8 |
1.25 |
|
FRF to Euro |
Indirect |
1 |
6.8 |
1 |
6.8 |
|
Euro to USD |
Direct |
1 |
1.25 |
1.25 |
1 |
|
FRF to USD |
Indirect/Triangulate/Euro |
1 |
5.44 |
1.25 |
6.8 |
In all cases, the visual rate for a currency pair remains the same, regardless of the direction. This is consistent with business standards. For a direct quoted rate, you multiply by the visual rate; therefore the visual rate goes into RATE_MULT and 1 (or the quote units) goes into RATE_DIV. For an indirect quoted rate, you divide by the visual rate; therefore the visual rate goes into RATE_DIV and 1 (or the quote units) goes into RATE_MULT.
The following examples show indirect quotation, direct quotation with quote units, and triangulation:
100 USD to GBP (indirect) = (100 USD / 1.6) × 1 = 62.50 GBP
1000 CHF to DEM (direct with units) = (1000 CHF / 100) × 119.335 = 1193.35 DEM
100 USD to FRF (triangulate) = (100 USD / 1.25) × 6.8 = 544 FRF
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