How to Configure Foreign Currency Valuation – Steps

Foreign currency valuation is to be done for preparing the financial statements at a key date.  Documents posted in foreign currencies have to be converted to company code currency for preparing the company financial statements.  Your company financial statement can include only those transactions which are posted in company code currency.

Hence all the postings which are open items and items which are posted in GL accounts with foreign currency have to be evaluated in company code currency.  Valuation is performed at the exchange rate on the valuation date.  In that way gain or loss is calculated and posted to exchange rate gain/loss accounts.

Configure Foreign Currency Valuation

Relevant Customizing for Foreign currency valuation in SPRO -> OB59 & OBA1.

1. Use Tcode OB07 to configure the Exchange rate type,
say B – Bank selling, G – Bank buying & M Average rate.

2. Use Tcode OBBS to maintain a translation ratio for the 2 currency which you want to create, say USD : INR.
Here you will find direct quotation & indirect quotation according to your requirement you need to maintain.

3. Use Tcode OB08 to maintain the Exchange rate, validity period of that exchange rate.

To record the profit & loss gained through the difference in exchange rate, you can do that through the following steps

1.Use Tcode OB59 to configure valuation method, in the screen check the check boxvaluate all the time & do the remaining settings.

2. create 2 G/L a/c 1 to record profit & other to record loss incurred through exchange rate, that should be auto posting.

3. Use Tcode OBA1 to assign those G/L to automatic posting.
Give your chart of account and 2 G/L you have created.

4. Next use Tcode F.05 to execute the Forex Run.

Also See: What is General Ledger Planning in SAP?

Recommended Reading For You

  • Foreign Currency Valuation in SAPForeign Currency Valuation in SAPForeign Currency Transactions: There three types of Exchange rates defined by SAP, Bank Buying Rate Exports Purpose             – G Type Bank Selling Rate Import/Expenditure     […]
  • How to Configure Foreign Currency Valuation in Sap?How to Configure Foreign Currency Valuation in Sap?Foreign Currency Valuation: This is the process to translate and adjust foreign currency amount of monetary accounts to local amount by a current suitable exchange rate (standard exchange […]
  • Foreign Currency Revaluation F.05 IssueForeign Currency Revaluation F.05 IssueAccording to FAS 52, transactions that result in a change in cash should go to the P&L account. In the case of a revaluation due to a timing difference(Monthend/yearend […]
  • SAP- AR & AP Interview QuestionsSAP- AR & AP Interview QuestionsSAP- AR & AP Interview Questions 1. At what level are the Customer & Vendor code stored in SAP? The customer and Vendor code are at the client level. That means any company […]
  • SAP Currency Exchange Rates Table (OB08)SAP Currency Exchange Rates Table (OB08)SAP Currency Exchange Rates Table (OB08) 1. Path : Accounting -> Financial Accounting -> Accounts Payable -> Environment -> Current Settings -> Enter Exchange […]
Comments (1)
  1. Vlada Mar 15, 2013

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: