5.5.3 Validating Exchange Rate Relationships

You must run the exchange rate validation process after adding or modifying exchange rate data. Run the process immediately or schedule one or more to be run in the future.

Each exchange rate has one of the following statuses:

• Not Yet Validated: The exchange rate has been input or loaded but not yet validated.
• Valid: The exchange rate has been validated.
• Invalid: The exchange rate has violated one or more acceptance rules.

Only exchange rates in Valid status are available for processing and they are not subject to future validation unless you edit them. The Rate Validation status is displayed in the Currency Rates window of the Rate Management.

Exchange Rate Validation Criteria: In the rate validation process, all exchange rate relationships in the database are examined for compliance with the following criteria. Error messages and warnings are displayed if one or more criteria are not met. For more information, see the Viewing Log Messages.

If a currency is defined as a Child in a fixed exchange relationship then it must not be in any floating (standard) exchange rate relationship at the same time. Consequently, all floating exchange rates to or from the Child currency must be defined through the Parent currency. If this criterion is not met then the following message is displayed: Invalid fixed relationship-Child currency exists in a standard exchange rate within the same period.

• A Child currency within a fixed relationship must not be a Child currency in any other fixed relationship during the same period. If this criterion is not met then the following message is displayed: Invalid fixed relationship-Child currency already exists in a fixed relationship for the same period.
• A circular relationship must not exist. In other words, a Child currency cannot link back to its Parent in any other fixed-rate relationship within the same period. If it does, then the following message is displayed: Invalid fixed relationship creates a circular relationship with other fixed exchange rates.
• Regarding new floating (standard) exchange rates, From and To currencies must not exist as Child currencies within any fixed exchange rate relationships. If this criterion is not met then the following message is displayed: From or To or Both currency or currencies in the new exchange rate already exist in a fixed relationship for the same period.
• If any exchange rate is equal to 0, then a warning message is displayed. 0 is a valid value. You can use it, for example, to designate an exchange rate with a currency of a country that no longer exists.

If two exchange rate relationships fail to meet these criteria then both of them will be labeled Invalid. (Exception, if one of the relationships is already in Valid status, then the other one will be labeled Invalid.) For example, if a currency is defined as a Child in a fixed rate relationship and is also defined as being in a floating relationship at the same time, then both fixed and floating rates for that currency will be labeled Invalid.

If there are both direct and inverse floating exchange rates defined for any two currencies (in other words, one currency is both a To and a From currency in relation to the other), then both relationships will be marked Valid.