Triangulation of currencies
Sage 200 holds exchange rates from foreign currencies to your base currency. It does not hold exchange rates between one foreign currency and another. If your bank account is in one foreign currency, and payment or receipt to the account is in another foreign currency, an overall conversion rate is calculated for the transaction, using triangulation of currencies.
In most cases, triangulation will be in comparison to your base currency, to determine the exchange rate to be used for the transaction. That is, the rate from each currency to your base currency will be amalgamated to produce an overall conversion rate that is then used to convert the transaction amount.
When a transaction involves a transitional euro currency This is a currency which has joined the euro but is in a period of transition. During a transitional period both the euro and the country's currency may be used to trade simultaneously., the conversion must always be via the euro. The rate from each currency to the euro will be amalgamated to produce an overall conversion rate. This rate is used to convert the transaction amount.
Triangulation example
Note: Conversion rates used in this example are not indicative of today's rates. You must check up-to-date rates for conversion between UK pounds and other currencies in the normal way.
If your base currency is GB pounds, the bank account is in US dollars and payment is in Mexican peso, the currencies are converted in the following way:
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Payment currency is converted into base currency, dividing by the conversion rate. So, 45,000 pesos are converted into pounds sterling, by:
- Dividing 45,000 by 12.930400 (conversion rate peso to pound sterling) to give 3,480.170760 pounds sterling.
- Rounding to 4 decimal places (3 or more decimal places are allowed).
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The result of step 1 (the pounds sterling value) is converted into the bank currency, multiplying by the conversion rate. So 3,480.1708 pounds sterling is converted into US dollars, by:
- Multiplying 3,480.1708 by 1.454720 (conversion rate US dollars to pounds sterling) to give 5062.674066166 US dollars.
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The result of step 2 (the US dollars value) is rounded to the nearest sub-unit of the currency denomination. For dollars, this is to the nearest cent.
- Rounding 5062.674066166 to the nearest cent, gives a result of 5062.67 dollars.
Note: The result of step 1 can have a large number of figures following the decimal point. You can round up the figure, but to no less than three decimal places (0.123456789 may be rounded to 0.123, 0.1235 or 0.12346 and so on, but not to 0.1 or 0.12).
If this example, is followed within Sage 200, the values are seen on the Amend Exchange Rate window. When entering the payment, click the Exchange Rate box to display the Amend Exchange Rate window.
