EURO Conversion: Exchange Rate Setting and Legal Conversion Rules


When the Euro is introduced, legal guidelines for converting internal EMU currencies will take effect. The exchange rates between two internal currencies will be fixed from a key date. Translating an amount from one currency to another must take place with the EUR base currency and use certain rounding rules. The SAP system will be prepared for these changes starting with Release 4.0. The internal translation module was adjusted accordingly. Additional checks of fixed exchange rates in the conversion transactions were carried out on a broad basis. Additional attributes were also included in the Customizing tables for exchange rate maintenance.

Alternative types of translation are represented by supplementary attributes of the exchange rate type. Specifically, the following three new properties were included:
"Exchange rate type uses legal EMU translation",
"Exchange rate type uses fixed exchange rates",
"The base currency must be defined as from-currency in the conversion factor table for the exchange rate type"

Diversion to alternative exchange rate types takes place in the conversion factor table.

Change system parameters in customizing

All entries are made in the Currencies activity.

Entries in the Customizing tables can be explained by an example: the exchange rate between the French franc (FRF) and the German mark (DEM) is fixed from 1/1/1999 using the rates or the Euro (EUR). From this key date, the rate will be
1 EUR = 1.95 DEM and 1 EUR = 5.786 FRF.

To make sure the fixed rate and the translation adhere to legal guidelines, you must make the following entries in Customizing:

1. A new exchange rate type (EURO) is defined, and the new attributes mentioned earlier (fixed rate, EMU translation algorithm and base currency = from currency) must all be set. EUR is entered as the base currency.

Define exchange rate types
2. For each entry in the conversion factor table,
Exchange rate type FRF DEM
a new entry
Exchange rate type FRF DEM 1.1.1999 "Factors" EURO is made.
This is valid for every exchange rate type.
3. In the conversion factor table, you must make entries for FRF/DEM, EUR/DEM and EUR/FRF for the EURO exchange rate type. These factors must be compatible with exchange rate types that already exist.

Process exchange rate factors
4. The example exchange rates above for the EURO exchange rate type are maintained in the exchange rate table.

Defining exchange rates

Further notes

The conversion programs delivered by SAP have already made some of the settings in Customizing that may become necessary. However, you should still check over your entries to make sure they are correct.