Currencies4.6fi_26.1
Chapter 26 Currencies
• The system provides standard functionality for processing transactions in foreign currencies and valuating transactions and accounts managed in foreign currencies.
• Chapter Objectives
– Provide an understanding of the configuration issues connected with foreign currency functionality in the system.
– Provide an understanding of how transactions posted in foreign currencies can be translated into the local currency.
– Provide an understanding of how open items and account balances are automatically valuated using standard system programs.
Currencies4.6fi_26.2
=
=
Country Currency(Company Code) Local Currency
Foreign CurrencyAll Others
Foreign Currency
Currencies4.6fi_26.3
Sales Order
Invoice
Automatic TranslationAutomatic Translation LocalCurrency
Documents Posted in Foreign Currency
Currencies4.6fi_26.4
Prerequisites
Local Currency Defined in
Company Code
Local Currency Defined in
Company Code
Translation Ratio Between
Foreign and Local Currency
Defined
Translation Ratio Between
Foreign and Local Currency
Defined
Foreign Currency Code
Defined
Foreign Currency Code
Defined
Exchange Rate Defined
Exchange Rate Defined
I.I. II.II.
III.III. IV.IV.
Currencies4.6fi_26.5
TranslationTranslationRatioRatioTableTable
Exchange RateExchange RateTableTable
CurrencyCodes
Currencies and Exchange Rates
Currencies4.6fi_26.6
Exchange Rate Table
Translation Ratio
Quotation Type
Validity Period
Exchange Rate Type
Currencies4.6fi_26.7
Documents and Exchange Rate Quotations
Indirect Exchange Rate
Direct Exchange Rate
Currencies4.6fi_26.8
Translation Ratios
Currencies4.6fi_26.9
DEM EUR
divided by
FRF EUR
Base Currency
Desired RateDEM FRF
Base Currency & Inversion
Inversion
1 DEM EUR
Desired RateEUR DEM
Currencies4.6fi_26.10
Parallel Currencies
TransactionCurrency
LocalCurrency
ParallelCurrencies
Currencies4.6fi_26.11
• Group CurrencyGroup Currency
• Hard Currency Hard Currency
• Index CurrencyIndex Currency
• Global Company CurrencyGlobal Company Currency
• Group CurrencyGroup Currency
• Hard Currency Hard Currency
• Index CurrencyIndex Currency
• Global Company CurrencyGlobal Company Currency
Parallel CurrenciesPossible Additional Currencies
$
Currencies4.6fi_26.12
US Germany Mexico
Transaction CurrencyLocal CurrencyGroup CurrencyHard Currency
US Germany Mexico
Transaction CurrencyLocal CurrencyGroup CurrencyHard Currency
XXX
USD
USD
XXX
DEM
USD
XXX
MXP
USD
DEM
US GroupGroup Currency
USD
Parallel CurrenciesExample of Currency Types in a Multinational Corporation:
Currencies4.6fi_26.13
Posting inANY CURRENCY
is possible
The Local Currency A Foreign Currency
Posting ONLY in theFOREIGN CURRENCY
is possible
G/L Account MasterCurrency Key (Account Currency)
Currencies4.6fi_26.14
Germany France Austria Belgium Luxembourg Netherlands Ireland Finland Portugal Spain Italy
Countries Adopting the Euro
Currencies4.6fi_26.15
EURO Configuration
Translation RatioTable
Exchange RateType Table
Currencies4.6fi_26.16
EURO Configuration
Currencies4.6fi_26.17
Expiring Currencies
Currencies4.6fi_26.18
CurrenciesChapter Summary
• Key Terms:
– Local Currency– Foreign Currency– Translation– Exchange Rate– Exchange Rate Type– Base Currency– Currency Inversion– Transaction Currency– Parallel Currencies
Currencies4.6fi_26.19
CurrenciesChapter Summary
• Key Terms continued:
– Group Currency– Hard Currency– Index Currency– Global Company Currency