SAP exchange rates are to be maintained to allow transactions in other than the company code currency or to book foreign currency transactions and update values in parallel currencies in the New G/L accounting.

Exchange Rates are used to define a relationship between two currencies and also to maintain exchange rates that are used to translate an amount into another currency.

You define exchange rates in the system for the following purposes −

  • Posting and Clearing − To translate amounts posted or cleared in foreign currency, or to check a manually entered exchange rate during posting or clearing.
  • Exchange Rate Differences − To determine gains or losses from exchange rate differences.
  • Foreign Currency Valuation − To valuate open items in foreign currency and foreign currency balance sheet accounts as part of the closing operations.

For example:

A company code currency is INR but it purchased material in USD currency, so in this case first translation ratios are to be maintained for INR/USD and USD/INR combination. After that SAP system will allow to specify an exchange rate against INR/USD and USD/INR combinations.

Exchange rates fluctuate every day and for this reason exchange rates are to be maintain on daily basis. In the real time scenario, an organization receives a daily exchange rate file through banks or third party team that uploads it to the SAP system.

Maintain Currencies:

Go to SPRO → SAP Reference IMG → SAP Netweaver → General Settings → Currencies → Enter Exchange Rates → Execute.

Enter Exchange Rates

Exchange rates can be entered as direct or indirect quotations. In direct quotation, we give multiple of base currency to foreign currency.

Example − 1 USD = 65 × 1 INR

For indirect quotation, it will be 1/65 USD = 1 INR.

How to create direct/indirect quotation in SAP FI?

Direct/Indirect Quotation

In the next window, enter the following details −

  • Exchange Rate Type.
  • Valid From date that is the start date from which the rates are applicable.
  • First Currency.
  • Quotation Rate.
  • Second Currency.

Direct/Indirect Quotation Detail

After entering the details, click the Save button. Enter the request number and click the tick mark.

Enter Request Number

In New GL accounting, SAP has provided a functionality called parallel accounting, i.e. for a company code additional two parallel currencies can be maintained. With the help of the exchange rate the SAP system will update values in additional currencies so it is helpful for management to view different reports at company code currency and group currencies levels.

Maintain Exchange Rates in SAP (Step by Step)

Prerequisites

  • Currency translation ratios to be maintain – Transaction code OBBS
  • Currency exchange rates – Transaction code OBB8

Month End Activities

To prepare financial statements of an organization the foreign currency valuation is to be performed. Through this step foreign currency transactions will convert to company code currency and exchange rate loss or gain will be determined. It is possible to reverse foreign currency postings.

Prerequisites for Foreign Currency Valuation

Valuation Method

It is necessary to define the valuation approach to perform foreign currency valuation for open items and balances.

Define a Valuation Method
Define a Valuation Method

Valuation Area

A valuation area is necessary to report different valuation approaches and post to different accounts. It  is assigned to a valuation method.

SAP Valuation Area
SAP Valuation Area

Assignment of Accounting Principle of Target Ledger Group

A ledger group will be assigned to an accounting principle. For example, the accounting principle GAAP is assigned to the leading ledger Z2.

Assignment of Accounting Principle to Target Ledger Group
Assignment of Accounting Principle to Target Ledger Group

Assign Valuation Areas and Account Principles

An accounting principle needs to be assigned to a valuation area.

Assignment of Valuation Area to Accounting Principles
Assignment of Valuation Area to Accounting Principles

Prepare Automatic Postings for Foreign Currency Valuation

Here G/L accounts need to be maintained to post exchange rate gain or loss for each G/L account.

Account Determination for Exchange Rate Differences
Account Determination for Exchange Rate Differences

Path: SPRO – SAP reference IMG – Financial Accounting (New) – General Ledger Accounting (New) – Periodic Processing – Valuate – Define Valuation Methods, Define Valuation Areas, Check Assignment of Accounting Principle to Ledger Group, Assign Valuation Areas and Accounting Principles and Prepare Automatic Postings for Foreign Currency Valuation

Transaction: FAGL_FC_VAL

Tables: T030H (Acct Determ.for Open Item Exch.Rate Differences)

T030HB (Acct Determ.for Open Item Exch.Rate Differences)

FAGL_BSBW_HISTRY (Valuation History for Documents)

 

SAP Exchange Rate Table

SAP has a dedicated table for maintaining exchange rates. The name of the table is TCURR.

SAP Exchange Rate Table
SAP Exchange Rate Table (TCURR)

The field ExRt of this table contains an exchange rate type. Exchange rate type M is provided by SAP which applicable to fetch an exchange rate for any foreign currency transactions. As per the client requirements, it is also possible to create new exchange rate types and it is not advisable to delete the standard exchange rate types.

Currency Translation Exchange Rate Types Table
Currency Translation Exchange Rate Types Table

The table TCURV contains the information about currency translation exchange rate types. In this table, there are the following fields:

  1. Reference Currency: Foreign currency translation is vital for many different currencies. Through the reference currency we can simplify maintenance of exchange rates. In this case, exchange rates need to be maintained against the exchange rate type and the reference currency combination.
  2. Buying and Selling rate: Buying and selling exchange rate types are not mandatory. If we maintain the exchange rate type here, then the spread needs to be maintain for all the relevant currency pairs.
  3. Inverter exchange rate: Inverter exchange rate helps to fetch exchange rate in case of unavailability. For example, the exchange rate for INR/USD might not be maintained but if you select this option, the system will consider the exchange rate for USD/INR.
  4. Exchange rate type uses special translation model: By selecting this option SAP will internally call an algorithm for calculation. It is used to meet the European Monetary Union (EMU) statutory guidelines. A reference currency needs be maintained if we are selecting this check box as per the EMU guidelines.
  5. Fixed: Exchange rates are calculated from the manually entered currency.

Path: SPRO – SAP Reference IMG – SAP NetWeaver – General settings – Currencies – Check Exchange Rate Types

Transaction code: OB07

Table: TCURV (Exchange rate types for currency translation)

Furthermore, there is a table for defining quotations for exchange rates – TCURN. These table has the following fields:

  1. Valid from: The date from which the exchange rate needs to be considered. If there is no valid-to date, the system considers the latest date as valid-from and the previous date as valid-to. For example, if in the system exchange rates needs to be maintained for 13.10.2015 and 14.10.2015, for 13.10.2015 valid-to also belongs to same date. Another example is if exchange rates need to be maintained for 13.10.2015 and 15.10.2015. In this case, the exchange rate for 13.10.2015 is valid until 14.10.2015.
  2. Indirect or Direct quotation exchange rates: Here we configure whether an exchange rate for the currency pair is on direct or indirect quotation basis.
Maintenance View for Table TCURN
Maintenance View for Table TCURN

A direct quotation means that exchange rates are entered for From currency to To currency. An indirect quotation means that exchange rates are entered for To currency to From currency. On the above screenshot, the currency AUD/NZD exchange rate is considered to be maintained against AUD to NZD. This kind of currency combination is called a direct quotation. If an indirect quotation is chosen for the same combination of currencies, then the exchange rate needs to be maintained for the same currencies NZD/AUD as an indirect quotation.

If a client wants to consider only direct quotations for all the currencies, then the quotations need to be maintained as shown below. By maintaining the currency quotation this way we can reduce the number of entries of each currency and their combinations.

Maintain Direct Quotation for All Currencies
Maintain Direct Quotation for All Currencies

Path: SPRO – SAP Reference IMG – SAP NetWeaver – General settings – Currencies – Define Standard Quotation for Exchange Rates

Table: TCURN (Quotations)

Prerequisites:

  • Currency translation ratios to be maintain – Transaction code OBBS
  • Currency exchange rates – Transaction code OBB8
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