Use the Currency Details window to add and define the characteristics of currencies in Treasury. In the Currency Details window you can set the net maximum exposure for a currency; authorize currencies for use; define and authorize currency combinations for use; and set policy bands for deal maturity periods by currency.
You can also use this window to set up spot rates for your currencies and define data feed codes for your foreign exchange rate sources. For more information on both of these topics, see: Current System Rates.
To deal in a currency, you must define its characteristics, such as its quotation basis and the year basis against the U.S. dollar.
Once you define a currency, you can change its characteristics at anytime by using the Currency Details window. To delete a currency, you must delete it from the Spot Rates, Parties, and Currency Combinations windows before you can delete it from the Currency Details window.
Define currencies in General Ledger. See: Treasury Setup Checklist.
In the Currency Details window, choose the Add/Maintain Currencies button. The Add/Maintain Currency Details window appears.
In the Currency Code field, choose the international code for the currency you want to add. The list of available currency codes is taken from the general ledger currency table.
If you want to limit your net exposure for this currency, in the Net FX Exposure field enter the maximum amount of the currency that you want to hold at any time.
Note: You can also define the net foreign exchange exposure limit in the Limits window. See: Currency Limits.
If you want the currency to appear at the top of the list of currencies in the Currency field of the foreign exchange deal input windows, in the FX Sequence field enter a foreign exchange sequence number for the currency. For example, if the top 5 currencies you use in foreign exchange trading are GBP, USD, CAD, JPY, and KRW, enter 1, 2, 3, 4, 5 in the FX Sequence field for the respective currencies.
If you want the currency to appear at the top of the list of currencies in the Currency field of the money market deal input windows, in the Cash Flow Display Order field, enter a sequence number for the currency. For example if the top 3 currencies you use for money market trading are USD, DEM, and JPY, then enter 1, 2, 3 in the Cash Flow Display Order field for the respective currencies.
In the Quotation Basis Against USD field, choose a quotation basis for the currency. The quotation basis determines how the currency is quoted against the U.S. dollar.
Base unit quote: Choose base unit quote if you are using the currency as a ledger currency against the USD dollar and for foreign exchange quotes. For example, in a DEM/USD quote, DEM is the ledger currency.
Commodity unit quote: Choose commodity unit quote if you are quoting the currency against USD, or against another base unit quote currency. For example, in a USD/DEM quote, DEM is the contra currency.
To check the quotation basis for a currency, divide the commodity unit amount of the currency by the USD exchange rate. If the result is the correct USD amount, choose commodity unit quote; otherwise, choose base unit quote.
In the Year Basis field, choose the number of days per year you want to use to calculate forward rates. Most currencies have a year basis of 360 days.
In the Rounding Factor field, enter the number of decimal places to round up forward rate calculations.
In the Day Count Basis field, enter the convention to use to count the number of days between two dates to calculate forward rates.
If you want to assign a GL calendar to a currency, in the GL Calendar field, select a GL calendar to define the non-business days. Currencies without a matching GL calendar will assume Saturday/Sunday weekend days.
If you want to calculate the future date of holidays for the chosen currency, in the Holiday Forward Years field enter the number of years into the future that you want to calculate the holidays for the currency.
If you do not want to upload the Treasury spot rates for this currency to General Ledger, enable the No GL Upload check box.
Save your work.
If you want to deal a currency, you must authorize that currency for use in Treasury. You cannot authorize a currency unless you have set up a spot rate for that currency against the U.S. dollar.
Define spot rate for currency. For more information see, Current System Rates.
In the Unauthorized Currencies region of the Currency Details window, choose the currency that you want to authorize.
To add this currency to the list of authorized currencies, choose the right arrow button. The unauthorized currency moves to the list of authorized currencies.
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If you want to view the current exchange rate between two currencies or perform deals using those currencies, you must set up and authorize the currency combination in the Currency Details window. A currency does not need to be authorized for you to set up a currency combination.
If you set up a currency combination using unauthorized currencies or if you set up a currency combination and do not authorize the currency combination for use, you can view the exchange rates, but you cannot enter deals for that currency combination.
Note: You must set up a currency combination between every authorized currency and the U.S. dollar.
In the Currency Details window, go to the Currency Combinations region.
To set a currency combination, choose the check box that is in the column of the ledger currency and the row of the contra currency.
Attention: The currency combination must be in the correct order for the market practice in your location. For example, in New Zealand, you record NZD/AUD, which results in a rate of .7950. In Australia, you record AUD/NZD, which results in a rate of 1.2579 (the inverse rate).
In general, the U.S. dollar is the ledger currency for the currencies that are recorded as a commodity unit quote.
To un-authorize a currency combination, choose the Combinations Details button and deselect the Authorized check box for the currency combination you want to un-authorize.
Enter the factor for the forward points in the Forward Point Factor field in the Combinations Details window. The factor you enter determines the interpretation of the forward points entered on the foreign exchange deal input form for subtype forward deals.
The following table shows examples of forward points:
| Forward Point Factor | Forward Points on Deal Input Form | Forward Points Interpreted As | Spot Rate on Deal Input Form | Forward Rate on Deal Input Form |
|---|---|---|---|---|
| 0 | 25 | 25 | 1.4500 | 26.4500 |
| 1 | 25 | 2.5 | 1.4500 | 3.9500 |
| 4 | 25 | 0.0025 | 1.4500 | 1.4525 |
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You can define your currency policy by setting the minimum and maximum percentage of "cover" (including foreign exchange options and bank balances) that you want in place to cover foreign exchange currency exposures within a specified time period.
In the Currency Details window, click the currency in the Authorized Currencies column for which you want to set a policy and click the Policy Bands button.
Define the time period for the policy by entering values in the Period From and Period To fields and choosing the period type. For example, you can specify a time period of 1 to 8 months by entering in 1 in the Period From field with Months in the Type field, then entering 8 in the Period To field and with Months in Type field.
Suggestion: Leave the Period To field empty for the last policy band period you define. This lets you cover currency exposures for all periods greater than the date that you specified in the last Period From field.
Enter a description for the policy.
Enter a minimum and maximum percentage coverage amount that you want for this period, for example, 25 for 25%..
Save your work.