Setting Up a New Base Currency

This chapter provides an overview of setting up a new base currency and discusses how to set up the euro as a new base currency in your system.

Understanding Setting Up a New Base Currency

Before you run the Currency Conversion Utility process to convert your base operating currency, you must set up your system for the new base currency.

The following sections discuss setup criteria that are specific to the euro. The euro's unique requirements may not necessarily apply if you are converting your base operating currency to a different currency. If you are converting your base currency to a currency other than the euro, we recommend that you review these setup steps carefully to make sure they are appropriate for the currency to which you are converting. You will need to adjust the steps to meet your specific needs.

Setting Up the Euro as a New Base Currency

If you are converting your base operating currency to the euro, set up the euro as a currency in your system prior to conversion. The following sections outline a procedure that you can use to complete this task.

For your reference, following is a table of EMU-participating countries and their standard currency codes:

Pages Used to Set Up a New Base Currency

Step 1: Establish a Euro Currency Code

If the euro is not defined as a currency code in your system, add a new euro currency code.

To add the euro currency code:

1. Access the Currency Code page.

2. Add EUR as the new Currency Code.

3. Enter the Effective Date for this currency code, a longer Description, and a Short Description for the euro.

4. Set the Status to Active.

5. Optionally, you can add the euro Currency Symbol.

6. Set Decimal Positions for the euro at 2.

7. Enter a Scale Positions value to control how many numbers appear to the left of the decimal in the currency display. Data is stored with full precision in the database itself.

   For example, if you want all million-dollar amounts displayed as the number of millions without the zeros, enter 6 as your scale position. In this case, 24,000,000 will be displayed as 24, but is stored in the database as 24,000,000.

8. Verify the Country Code.

   Generally, PeopleSoft recommends that you leave the Country Code field clear for the euro because more than one country uses this currency. However, if your installation is localized within one Eurozone country, you could enter that country on this page.

Step 2: Establish Currency Quotation Methods

This section discusses setting the currency quotation method.

Note. The settings on this page depend on whether you define a direct or indirect quotation method.

See PeopleSoft Enterprise Components for PeopleSoft Enterprise HRMS and Campus Solutions 8.9 PeopleBook, "Working With Currencies and Market Rates," Defining Currency Quotation Methods

To specify direct quotation methods for nonparticipating currencies (optional):

1. Access the Currency Quotation Method page.

2. Enter the rate Effective Date and the Status for the currency quotation method.

3. Specify that the quotation method is Direct, enter the Quote Units, and select or clear the Auto Reciprocate check box for this quotation method.

   Direct currency quotation methods do not require triangulation options.

4. Define currency quotation methods for all combinations of the currencies involved.

When setting currency quotation methods for participating currencies, keep the following in mind.

The following table contains recommended settings for defining currency quotation methods for EMU participating currencies, where:

For the NCU-->NON conversion, triangulation through the euro is optional. Use the settings shown in this example if you select triangulation through the euro.

Two EMU participating countries require an indirect currency quotation method. For indirect currency quotation methods, also define triangulation options.

The Currency Quotation Method page automatically reciprocates itself when you set up a From Currency that has been used as a To Currency. For example, if you define the conversion of USD to ESP as indirect and then define the ESP to USD record, this record is automatically created to indicate a quote method of direct. If you change the quote method on the ESP to USD record, the USD to ESP record is automatically updated.

The following table shows each possible field value with its reciprocal value:

Step 3: Establish Market Rate Definitions for the Euro and NCUs

To add or update market rate definitions for the euro and NCUs:

1. Access the Market Rate Definition page.

2. Enter the desired Term (in days). A zero (0) term indicates a spot rate.

   Note. Only PeopleSoft Treasury Management uses nonzero terms.

3. Enter the appropriate From Currency and To Currency.

   These values are used for exchange rate pairs. When using triangulation, include a definition for each of the currency pairs involved in the triangulation.

4. In the Maximum Variance field, indicate the percentage of variance allowed when the user maintains the market rate.

   You'll get an error message if the change exceeds the specified tolerance. The default value is 2.5%.

5. In the Error Type field, enter the type of error processing that occurs if the Maximum Variance is exceeded.

   You have the following options:

   • None. No error processing occurs; the new rate is used, even though it exceeds the limit.

   • Warning. A warning displays; you can ignore it if desired and save the new rate.

   • Stop. Processing halts; the system prevents you from saving the new rate.

See PeopleSoft Enterprise Components for PeopleSoft Enterprise HRMS and Campus Solutions 8.9 PeopleBook, "Working With Currencies and Market Rates," Defining Market Rates

Step 4: Defining Market Rates for the Euro

PeopleSoft recommends that you use the market rates listed in the following table for the euro, where:

Step 5: Enter Fixed Exchange Rates Between the Euro and NCUs

To enter a fixed exchange rate:

1. Access the Market Rates page.

2. Enter the Effective Date if it is other than the current date.

3. Enter the Rate as of the Effective Date.

   The Rate field displays the visual rate, or in the case of triangulated exchange rates, the primary visual rate, which is typically the cross rate, but which can also be one of the other component rates of the triangle.

   You can edit the rate for non-triangulated rates, and also for triangulated rates if a quotation method is defined for the currency pair and the Cross-Rate Allow Override check box is selected on the Currency Quotation Method page. If the override is not allowed, users can update the exchange rate values to and from the reference currency on the Exchange Rate Detail page.

The following graphic represents the three component visual rates in an exchange rate from FRF to USD, triangulating through the euro. You can access all three visual rates of a triangulated exchange rate by opening the Exchange Rate Detail page.

Component visual rates in a triangulated exchange rate

You can't edit the Rate field unless all of the following conditions are true:

• The rate is triangulated

• The primary visual rate is the cross rate.

Clear the Allow Override check box on the Currency Quotation Method page for the exchange rate's quotation method.

If a quotation method is defined for the currency pair and if the Auto Reciprocate check box for quotation method is selected, then creating or maintaining a rate for a currency pair automatically creates or updates the rate of the reciprocal currency pair. For example, if you change the USD to GBP rate, the GBP to USD rate automatically updates. You can only automatically reciprocate currency pairs for which quotation methods have been defined.

If a rate definition does not exist for the currency pair, one is automatically created with the default values of 2.5% maximum variance and warning message processing. You can use the Rate Definition text in the upper-right corner of the page to view or change the rate definition values.

If you selected the auto-reciprocate check box on the quote method in step 3, the system automatically generates the rates from EUR to the NCUs.

See PeopleSoft Enterprise Components for PeopleSoft Enterprise HRMS and Campus Solutions 8.9 PeopleBook, "Working With Currencies and Market Rates," Defining Market Rates

Step 6: Set the Market Rates for EMU-Participating Countries

Use the following table to define the rates for EMU-participating countries as of January 1, 1999:

Note. Enter these rates into the system only once for each rate index and rate type. If you are defining fixed exchange rates for the euro, use an effective date of January 1, 1999.

Step 7: Verify Details

To view the details of the Rate Definition, click the Rate Definition link in the upper right corner of the Market Rates page.

You can view additional rate information on the Exchange Rate Detail page, which you can access by clicking the Exchange Rate Detail icon to the right of the Rate Field. This page displays the rules by which the exchange rate is calculated. You can modify the Rate value if necessary. The following table describes the information on the Exchange Rate Detail page.

See PeopleSoft Enterprise Components for PeopleSoft Enterprise HRMS and Campus Solutions 8.9 PeopleBook, "Working With Currencies and Market Rates," Defining Market Rates

Step 8: Generate Triangulated Rates Between NCUs

In this step, you generate the triangulated rates between the NCUs that triangulate through the euro.

Note. The triangulated rates between the NCUs only need to be generated once for each rate index and rate type.

To generate triangulated rates between NCUs:

1. Access the Calculate Cross/Reciprocal Rt - Parameters page.

2. Select the appropriate Language.

3. Select the Market Rate Index and the Term.

   Note. All applications other than PeopleSoft Treasury Management use the default Index, MODEL, and a Term of 0.

4. Select the From Common Currency.

5. Select the Exchange Rate Type.

6. Select the As of Date pertaining to the exchange rate used in this rate calculation.

7. Select the Generate Report check box if you want to generate a report that displays the exchange rates and the reciprocal and cross-rate calculations.

8. Select the Override Existing Rates check box if you want this calculated rate to override rates for this Exchange Rate Type currently on the Exchange Rate table (regardless of the As of Date).

9. Select the Generate Reciprocal Rate check box to have the system automatically calculate reciprocal rates for you.

   Note that PeopleSoft does not directly manipulate the exchange rates; rather, the system uses numerator and denominator values such that:

   From currency * RATE_MULT/RATE_DIV = To currency

   Suppose you want a reciprocal rate between US dollars and French francs. You enter USD to FRF = 5; the system automatically generates the reciprocal rate FRF to USD = 1/5, or 0.2.

10. If needed, choose to have the system automatically Generate Cross Rates.

    For example, for cross-currency rates between dollars, francs, and German deutsche marks, you enter USD to FRF = 5 and USD to DEM = 1.43; the system automatically generates FRF to DEM = 1.43/5 = 0.286. If you choose to generate cross rates, select a From Currency and a To Currency. The To Curr field is useful if you need a particular rate. You can enter a wild card of % in either field or both fields to indicate from all or to all currencies.

11. Select the Rate Triangulate check box to have the system convert two currencies through a third currency.

12. After you've made the appropriate selections, click Run.

PeopleSoft recommends that you use the following cross/reciprocal rate calculation settings for the euro:

See PeopleSoft Enterprise Components for PeopleSoft Enterprise HRMS and Campus Solutions 8.9 PeopleBook, "Working With Currencies and Market Rates," Calculating Cross, Triangulated, and Reciprocal Rates

Step 9: Enter Exchange Rates Between Euro and Non-Eurozone Currencies

Use the same Market Rate page that you used to enter exchange rates between the euro and NCUs (or other rate import mechanisms) to record exchange rates between the euro and non-Eurozone currencies. Typically, you maintain these rates just as frequently as you maintain other rates in your system.

See PeopleSoft Enterprise Components for PeopleSoft Enterprise HRMS and Campus Solutions 8.9 PeopleBook, "Working With Currencies and Market Rates," Defining Market Rates

Step 10: Generate Triangulated Rates Between NCUs and Non-Eurozone Currencies

Use the same Cross/Reciprocal Rate Calc (cross/reciprocal rate calculation) process (EO9030) that you used to generate triangulated rates between the euro and NCUs to generate the triangulated rates between the NCUs and the non-Eurozone currencies that triangulate through the euro. Run this process to generate new triangulated rates each time you maintain exchange rates between the euro and non-Eurozone currencies.

PeopleSoft recommends that you use the following settings for euro conversion:

See PeopleSoft Enterprise Components for PeopleSoft Enterprise HRMS and Campus Solutions 8.9 PeopleBook, "Working With Currencies and Market Rates," Calculating Cross, Triangulated, and Reciprocal Rates