1.13 Maintain Currency Exchange Rates

This topic explains systematic instructions to maintain currency exchange rates.

In the Currency Exchange Rates Input screen, maintain exchange rates for a currency pair, the rates at which buy and sell one currency for another.

A bank determines its buy and sell rate for a currency pair by applying a spread (that is, its profit margin) to the mid-rate of the currency pair. The mid rate is the basic rate at which a currency pair is exchanged.

The spread applied for a currency pair varies with the transaction type, while the mid-rate usually remains constant. Consequently, different rates apply to different transaction types. For instance, dollars in currency are purchased at a certain rate, while USD traveler’s checks are bought at a different rate. In Oracle FLEXCUBE Universal Banking, define a rate type which wants to associate with a transaction type (For example, CASH, TRAVCHKS, etc.) in the Currency Exchange Rates Input screen.

In the Currency Definition screen, define the mid rate, buy and sell spread applicable to each rate type. The buy and sell exchange rates are computed by the system. Buy rates and sell rates can either be maintained by individual branches or can be input by the HO and propagated to all the branches.

If the flag Copy Exchange Rates to Branches is set to Yes at Bank Parameter Level, then on the authorization of exchange rate maintenance:

• If the branch for which the rate is being uploaded or maintained is the head office branch, then the rate would be copied to all those branches that have the same country code as the head office branch.
• If the branch for which the rate is being uploaded or maintained is not the head office branch, but has the same country code as the head office branch, then the rate being uploaded or maintained would be specific to the branch and would not be copied to any other branch.
• If the branch for which the rate is being uploaded or maintained is not the head office branch and also does not have the same country code as the head office branch, then the rate is maintained would be copied to all the branches that have the same country code linked as the branch for which the rate is being maintained or uploaded.

In the Bank wide preferences screen, if the Copy Exchange Rates to Branches is not specified, then the Currency Exchange Rates Input screen is maintained at the branch level by the different branches.

In the Currency Exchange Rates Input screen, maintain the following parameters for each rate type of a currency pair:

• Mid Rate
• Buy Spread and Sale Spread
• Buy Rate and Sale Rate

Note:

The fields which are marked in asterisk are mandatory.

1. On Homescreen, type CYDRATEE in the text box, and click Next.
   The Currency Exchange Rates Input screen displays.

   Figure 1-16 Currency Exchange Rates Input

   
   

   
   Description of "Figure 1-16 Currency Exchange Rates Input"

   
   
2. On the Currency Exchange Rates Input screen, specify fields.
   For more information on fields, refer to the field description table.

   Table 1-18 Currency Exchange Rates Input - Field Description

   Field	Description
   Currency 1 and Currency 2	Click Search and specify the currency pair for which want to compute the exchange rates from the list of values. The list displays the currency pair that is maintained for the country to which the branch belongs. The pair must be selected keeping in mind the quotation method for exchange rates as followed by the market. The system offers the choice of maintaining both currencies as Currency 1 or Currency 2, USD against DEM and DEM against USD. For the pair specified, the following parameters need to be maintained to arrive at the buy and sell rate of currencies: Rate Type Mid Rate Buy Spread Sell Spread
   Branch Code	The system displays the branch code.
   Rate Type	This is the rate type for which exchange rates are being maintained for a currency pair. For different transaction categories, the bank would like to maintain different exchange rates. For example, a traveler’s check is purchased at a certain rate whereas a bill of exchange is bought at a different rate. In the front-end modules, where products to cater to the various transaction types of the bank are defined, an appropriate rate type to the product can be linked. For instance, the user can create a product to cater to outgoing cross-currency transfers by SWIFT. For this product, if the user define the rate type to be STANDARD then for all contracts linked to this product, the Standard Rate Type would be applied.
   Mid Rate	The Mid Rate is an indicative exchange rate for a currency pair. It is the average of the buy and sell rate quoted by the market for a currency pair. Refer to the unresolvable-reference.html#GUID-64250903-542C-420A-A68D-086074031A32__TABLE_IQS_XHQ_PWB
   Buy Spread	This is the buy spread for a currency pair. It can be defined as the profit margin specified over the mid rate when buy Currency 1 for Currency 2. Define the buy spread in two ways, either in points or in percentage. The system computes the effective buy spread.
   Sale Spread	This is the sell spread for a currency pair. It can be defined as the profit margin specified over the mid-rate when sell Currency 1 for Currency 2. Define the sell spread either in points or in percentages. The system computes the effective sell spread.
   Buy Rate	The buy rate is the rate of exchange for a currency pair, which is computed by the system based on the mid-rate, the spread specified, the spread definition, and the quotation method maintained in the Currency Definition screen.
   Sale Rate	The sell rate is the rate of exchange for a currency pair, which is computed by the system based on the mid-rate, the spread specified, the spread definition and the quotation method maintained in the Currency Definition screen. Input the buy and sell rate for a currency pair. In this case, the system will compute the spread for the rate type.
   Rate Date	The system displays the Rate Date after entering the exchange rate for a currency pair, the system will default the Rate Date as the Application Date. The Rate Date will always be less than or equal to the application date.
   Rate Sequence	This is a running serial number for the Rate Date. Specify the serial number. The entry will be validated for uniqueness. For example, there could be only one exchange rate between USD and EUR for 31/07/2003 with Rate Type as STANDARD with Rate Serial as 0001. Thus, this will be a unique rate serial for a currency pair, and rate type combination for a given rate date. On entering the exchange rate for a currency pair, the system will default the Rate Date as the Application Date and the Rate Serial as the latest available serial for the currency pair + 1. The Rate Serial Number will be system generated. However, this can be modified if required. This number takes into account the Rate Serial Number present in the Currency Rates History screen too. The Rate Serial Number and the Rate Date will be displayed during the authorization of the Rate in the Currency Authorization screen.

   Table 1-19 Mid Rate - Example

   Field	Description
   Currency 1	USD
   Currency 2	INR
   Buy Rate	1 USD = 1.7020 INR
   Sale Rate	1 USD = 1.7040 INR
   Mid Rate	1.7030

3. Click Authorize to authorize the record.
   Authorization of exchange rates is done from the Currency Exchange Rates Input screen. Details like Old Value, and New Value for each field (Buy rate, Mid rate, etc.) are displayed.
4. For revising the exchange rates for the bank or the branches, process the Currency Definition screen.
   1. Click the currency pair whose exchange rate wants to revise, and click Unlock on the toolbar.
   2. Input/modify the new rates for the pair.
5. Click Exit to end the transaction.