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MM-IV-GF-CUR Currency
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Contents:
1 Introduction
1.1 General Information
1.2 Other Sources of Information
2 Definitions
3 Function
3.1 Invoices in foreign currencies
3.1.1 Automatic Foreign Currency Translation
3.1.2 Exchange Rate Differences
3.1.3 Exchange Rate Rounding Differences
3.1.4 Parallel currencies
3.2 Customizing
 3.2.1 Currency definition
3.2.1.1 Local currency
3.2.1.2 Multiple currencies
3.2.1.3 Material ledger currencies
3.2.2 Currency translation
3.2.2.1 Exchange rate types
3.2.2.2 Ratios for currency translation
3.2.2.3 Exchange rate
4 Technical Information
4.1 Important locations for debugging in Invoice Verification - General
4.2 Creation time of currencies in LIV
5 Tips
5.1 Troubleshooting
1 Introduction
This technical information is used primarily for training new employees in
support and development.
The contents of this documentation are for internal use only and must not be
passed on to customers.
1.1 General Information
1.2 Other Sources of Information
For further information refer to the Online Documentation (Chapter 'Entering
invoices in foreign currencies').
Consulting notes to currency. The following notes provide assistance to almost
any currency-related problem explaining the system logic in different currency
calculation processes.
MUST-TO-REMEMBER NOTES:
331910 MR1M, MIRO: Postings in foreign currency/local currency
128 Exchange rate differences between GR/invoice
116250 MR08/MR8M:Cancellation+exchange rate differences(KDM)
188324 MIRO: Update of header data
308008 FAQ: Posting logic: GR/IR clearing account
499891 MR8M: Cancellation of an invoice in foreign currency
374496 Rules for currency translation with active material ledger
393461 Inexplicable amounts in foreign currency in GR for PO
449277 M8008: SYSTEM ERROR: error in routine
574583 MIRO: BADI for value date
164505 Exchange rate differences for procurement
132885 Clearing of GR/IR account in several currencies
119651 Invoice f.PO w.not equal currencies &exchange rates
142091 Rounding differences during invoice entry
112022 MR01: Exchange rate difference
162810 MR08: Amounts differ from source document
393571 MRKO: Consignment liabilities account not cleared
452307 MR01: Diff. due to ER rounding w/ foreign currency
487162 MRKO: Manual clearing of consignment liabilities
377124 MIRO, MR1M: Value date
201445 Info: Currency translations in settlement
367132 CO-PA valuation: exchange rate in accordance with value date
153707 Currency translation miscalculates by 100, 1000..
191927 Posting logic: GR for foreign currency PO

2 Definitions
[Define all key words of your topic
If possible, use hyperlinks to the official SAP glossary (SAPNet, alias
sapterm).
Local currency
The currency of a company code (country currency). In one company code several
local currencies can be defined, in that case the first local currency (currency
type = 10).
Transaction currency
The currency in which a document is processed (currency type = 00).
3 Function
3.1 Invoices in foreign currencies
An invoice in foreign currency exists if the currency in the invoice is
different from the local currency defined for the company code.
The buyer enters the currency that is used when placing a purchase order with a
foreign vendor in the purchase order itself. Usually you receive an invoice in
the currency specified in the purchase order, but you can also enter the invoice
in a different currency!
3.1.1 Automatic Foreign Currency Translation
When you enter an invoice in foreign currency, the system automatically
translates the foreign currency amounts to local currency.
The system calculates the exchange rate as follows:
If the buyer entered a fixed exchange rate in the purchase order, the system
uses this rate to translate the amounts to local currency.
If an exchange rate was entered in Invoice Verification, the system uses this
rate to translate the amounts to local currency.
If an exchange rate was entered in neither the purchase order nor Invoice
Verification, the system uses the exchange rate pre-defined in Customizing for
Financial Accounting that is valid for the posting date.
3.1.2 Exchange Rate Differences
If a purchase order is entered in foreign currency, the amounts are translated
from foreign currency into local currency at goods receipt. If you enter the
invoice for the purchase order in the foreign currency, this can lead to
currency translation differences between the goods receipt and the invoice
receipt.
How these differences are posted depends on how your system is configured in
Customizing for Invoice Verification:
The exchange rate differences are based on the value determined using the
exchange rate at the time of goods receipt minus the value determined using
the exchange rate at the time of invoice receipt.
The exchange rate differences are based on the value determined using the
exchange rate at the time of invoice receipt minus the value determined using
an assumed or planned exchange rate valid for a full year or a season, for
example.
No exchange rate differences are determined. Fluctuations in the exchange rate
are treated as price variances and posted to a stock or price difference
account, depending on the type of price control defined for the material.
3.1.3 Exchange Rate Rounding Differences
When an invoice is posted in a foreign currency, the amounts are translated into
local currency. Since the system rounds off the amounts in each posting line,
this can lead to rounding differences due to the currency translation.
When no cross-company code transaction takes place and no different tax rate has
been used, these differences are posted to the vendor account.
3.1.4 Parallel currencies
With purchase orders in foreign currency, the postings at goods receipt and
invoice receipt are updated both in the order currency and in local currency.
The posting amounts in each currency are determined from the PO history
independently of each other.
You can also use the Product Cost Controlling (CO-PC) component in your company
to manage stocks of materials in several currencies in parallel. This allows you
to valuate stocks in parallel currencies based on the actual exchange rates of
the transactions causing the change in stock value.
For further details regarding parallel currencies, please review note 39919.
3.2 Customizing
3.2.1 Currency definition
3.2.1.1 Local currency
There are several customizing settings to be taken into consideration within the
currency customizing settings. Most of the settings belong originally to the FI
area, but because of the
Close relationship between MM-IV and FI and the frecuency of MM-IV problems
related with currency, it is very important to know and master these:
First of all, local currency is defined on company level and can be checked
through transaction OBY6:
Transaction Definition IMG
OBY6 Check Company Code Clobal Data Financial Accounting
Financial Accounting Global Settings
Company Code
Enter Global Parameters

Accounts must be managed in the national currency. This currency is also known
as the local currency or the company code currency. Amounts that are posted in
foreign currency are translated into local currency.
The local currency can be defined for each company code in FI customizing
(Enterprise Structure -> Definition -> Financial Accounting -> Define, copy,
delete, check company code)
Under this transaction, the role of field "Crcy transl. For tax" (V_001_B-TXKRS)
is also very important. It determines how tax amounts will be translated.
Tax amounts are normally translated using the exchange rate prescribed by the
tax base amount. If you want to enter or have the system propose a different
exchange rate for translation, you have to select the appropriate setting for
this option. The alternative exchange rate results in a local currency balance
in the document. This balance is posted automatically to a separate account.
The field Max. exchange rate deviation (V_001_B-WAABW) should, as a
recommendation, never exceed 10%.
3.2.1.2 Multiple currencies
In some countries, however it is very typical to introduce a second or a third
local currency.
Transaction Definition IMG
OB22 Check Additional Local Currencies Financial Accounting
Financial Accounting Global Settings
Company Code
Multiple Currencies
Define Additional Local Currencies

You can define additional currencies per company code which you would like to
manage parallel to the local currency. In this case, you can choose between:
Group currency
Group currency is the currency which is specified in the client table or which
is to be entered there.
Crcy Type 30 Group currency
Valuation 0 Legal valuation
Ex. Rt. Type M Standard translation at average rate
Srce Curr. 1 Translation taking transaction currency as a basis
TrsDte Type 3 Translation date
The currency type must not be changed for company codes that are already in use.
Hard currency
Hard currency is a country-specific second currency which is used in countries
with high inflation. In economics, refers to a currency in which investors
have confidence, such as that of a politically stable country with low
inflation and consistent monetary and fiscal policies, and one that if
anything is tending to appreciate against other currencies on a trade-weighted
basis. Examples of hard currencies at this time include the United States
Dollar, the Euro, the Pound Sterling, the Japanese Yen, and the Swiss Franc.
Before its replacement with the Euro the Deutschmark was considered perhaps
the best hard currency.
In customizing it is designated with a 40
Index-based currency
Index-based currency is a country-specific fictitious currency which is
required in some countries with high inflation for external reporting (for
example, tax returns).
In customizing it is designated with a 50
Global company currency
Global company currency is the currency which is used for an internal trading
partner.
In customizing it is designated with a 60
A maximum of two currencies can be managed for all postings in FI and CO
independent of the currency types used in the controlling area. Currency type 10
is always managed in FI. In addition, if needed, currency type 30 can be managed
as a parallel currency in FI.
There is also currency type 80 (ledger currency) in FI-SL and currency type 90
in Profit Center Accounting (currency of Profit Center Accounting). You can also
activate type 20 in FI-SL and Profit Center Accounting. In FI, a maximum of 3
parallel local currencies can be managed per company code but category 10 is
mandatory. The various currency types are saved in one or several ledgers for
the general ledger. You can find the exact currency translation parameters in
view V_T001A (you can set whether the system should translate from transaction
currency, local currency and so on).
If the CO currency type is 20 and you have not activated a parallel currency in
FI, then, in contrast to the usual logic, the system searches in AA for an area
which has the currency key that matches the CO currency.
Material ledger:
You can invariably use all of the currency types with the material ledger.
Exception:
With a stock transfer, the delivering material stock forwards its valuation to
the receiving stock. If the delivering material stock doesnot manage the same
currency types as the receiving material inventory (rarity!), the system
translates the missing currency types for the receiving inventory from currency
type 10 of the delivering material stock.
Transfer prices:
You can only use transfer prices with currency type 10 or 30, since currency
type 20 is not supported in FI Customizing (Note 119428).
3.2.1.3 Material ledger currencies
Material inventory values are normally carried by the SAP system in one
currency. The material ledger component enables the R/3 System to carry
inventory values in two additional currencies/valuations. Therefore, all goods
movements in the material ledger are performed in up to 3 currencies or
valuations. Currency amounts are translated into foreign currencies at
historical exchange rates directly at the time of posting. Businesses such as
those in high-inflation countries can therefore carry their inventories in a
more stable currency (such as US dollars). This reveals inflationary effects on
inventory values.
Material ledger data forms the basis of actual costing and is used to manage
valuation prices in multiple currencies and valuations. Consequently, material
ledger data supplements the material master record. In addition, material ledger
data can refer to materials that are part of sales order stock and project
stock.
In order to check in Customizin if Material Ledger is active, please read the
following path:
Transaction Definition IMG
OMX1 Check Additional Local Currencies Controlling
General Controlling
Multiple Valuation Approaches/Transfer Prices
Basic Settings
Check Material Ledger Settings
Activate Valuation Areas for Material Ledger

You can activate the material ledger for one or more valuation area.
If the material ledger is active for a particular valuation area, all materials
in the valuation area are valuated using the material ledger.
In the standard system, the material ledger is not activated for any valuation
area.
Settings about currencies in material ledger can be checked by displaying
material ledger relevant customizing settings (transaction CKM9):

3.2.2 Currency translation

3.2.2.1 Exchange rate types
It refers to the exchange rate type whose average rate is used to determine the
buying rate. However, the 'Translation date' field (value date) for the foreign
currency translation for foreign currency invoices is not an input field in the
logistics invoice verification transactions (on the FI side it is possible). In
Logistics invoice verification the following possibilities exist:
The exchange rate can be fixed in the purchase order. The system then uses this
fixed exchange rate in the invoice.
In certain cases, it is wanted that the value date is derived from the document
date. For Release 4.6C and 4.70, note 574583 describes the derivation of the
value date via an implementation with the help of a BAdI. By means of this
implementation, the system can derive the value date automatically from the
document date (or from other date - and not from the posting date as in the
standard).
Transaction Definition IMG
OB07 Define exchange rate types General Settings
Currencies
Check exchange rate types

In the invoice verification the system uses the exchange rate type "M" as
default for foreign currency translation. This exchange rate type must be
contained in the system. The exchange rate types apply to all company codes.
In this transaction you can:
1. Check the standard exchange rate types. Create additional exchange rate types
if necessary.
2. If you want to specify that all currency translations for a rate type must be
carried out using a base currency, enter a currency (such as the group currency)
in the Base cur field.
If you need to carry out currency translations between a number of different
currencies, you can simplify exchange rate maintenance by entering a base
currency for the exchange rate type. Instead of entering translation rates
between every single currency, you then only need specify the translation rate
between each currency and the base currency. All currency translations then take
place in two steps - into the base currency and from the base currency into the
target currency.
Example
The base currency is USD. You want to translate JPY to GBP. To do this, the
following entries must be made in the table for maintaining currency translation
rates:
Ratio for JPY -> USD
Ratio for GBP -> USD
Translation from JPY to GBP is then carried out automatically. The translation
is done as though this exchange rate (JPY -> GBP) was actually entered in the
conversion table. In this example, the base currency (USD) is the To-currency
and JPY or GBP the From-currency.
For exchange rate relations within the EU, it is a legal requirement that the
base currency (EUR) is the From-currency. You set the indicator for this in the
BCurr=from field.
3. If you want to use the base currency specified as the From-currency, select
the BCurr=from field.
4. If you want to use the inverted rate for translating two currencies, select
the Inv field.
Note: The reversed rate is used only if you have not made an entry for the
corresponding exchange rate in the activity Enter exchange rates.
Example
For the exchange rate type 'M' the indicator Inv is set to 'X'. You want to
translate USD to EUR. There is at lest one entry for EUR -> USD, but no entry
for USD -> EUR in the table for maintaining currency translation rates. The
system calculates the ratio for USD -> EUR from the latest ratio EUR -> USD.
5. If you want to calculate the amounts according to the European Monetary
Union's legal directives, select the EMU field. If you set this indicator it
means that the SAP System internal translation modules calculate using a
different algorithm. The algorithm has been adjusted to meet the European
Monetary Union statutory guidelines. The indicator must be set if the statutory
conversion rules agreed by the participating countries in the EMU are to be
used.
This procedure is not effective if calculation is to be undertaken using bank
selling rates, bank buying rates and exchange rate spreads.
If you set this indicator, you must specify a base currency.
Example
The base currency is EUR, the indicator EMU is set to 'X'. You want to translate
GBP to CHF.
If the indicator EMU is set to 'X', the system calculates as follows:
Translate the amount in GBP to EUR (ratio GBP -> EUR) -> Round off the result to
third decimal place -> translate the rounded amount in EUR to CHF (ratio EUR ->
CHF).
If the indicator EMU is set to ' ', the system calculate as follow:
Translate the amount in GBP to EUR (ratio GBP -> EUR) -> translate the amount in
EUR to CHF (ratio EUR -> CHF).
6. If you want the system to check whether the application uses an exchange rate
other than the fixed exchange rate, select the indicator in the Fixed field.
This indicator must be set for the exchange rate type that is used for currency
translation within the EMU.
3.2.2.2 Ratios for currency translation
 Transaktion Definition IMG
OBBS Define translation ratios for currency translation General Settings
Currencies
Define translation ratios for currency translation

In this activity, you enter the translation ratios for currency translation. You
enter these ratios for each exchange rate type and currency pair. You also
specify whether you want to use an alternative exchange rate type for specific
currency pairs.
Example
As of 01/01/1999 the exchange rate for DEM to FRF will be calculated via EUR. To
translate amounts enter:
01/01/1999 in the Valid from field:
The exchange rate type under which the exchange rates of the European national
currencies are stored in the Alt. ERT field: normally it is EURO
Requirements
You must have defined the exchange rate types under which you want to define
your translation ratios. You do this in the activity Check Exchange Rate Types

You must have defined the required currency keys. You do this in the activity
Check Currency Codes
Activities
Specify existing currency translation ratios for each exchange rate type for
the currency pairs you need in your company.
Enter the exchange rate type to which you want to switch with specific
currency pairs in the Alt. ERT field.
Further Notes
The ratios you enter here for currency translation are displayed again when
maintaining the exchange rates. For information on how to maintain exchange
rates, see Enter Exchange Rates.
Shall errors be discovered in the OBBS settings. Special attention should be
paid in the corrections of the values in the transaction. Note 189621 - released
internally - includes some data of how to proceed in the case that a customer
may face such a problem.
3.2.2.3 Exchange rate
Transaction Definition IMG
OB08 Enter exchange rate General Settings
Currencies
Enter exchange rate

Exchange rates are required to be able to:

Translate foreign currency amounts when posting or clearing or to check an
exchange rate entered manually
Determine the gain and loss from exchange rate differences
Evaluate open items in foreign currency and the foreign currency balance sheet
accounts
The exchange rates are defined by period ("valid from").
Note
The system uses the type M exchange rates for foreign currency translation when
posting and clearing documents. An entry must exist in the system for this
exchange rate type. The exchange rates apply to all company codes.
The exchange rate relations for currency translation are only displayed here.
Read the chapter Define Translation Ratios for information on the actual
maintenance.
Requirements
You have defined the rate types under which you want to store your exchange
rates and the required currency keys.
Standard settings
Sample exchange rates are already stored in the standard system.
Recommendation
You should delete the exchange rates you do not need.
Activities
Check whether the exchange rates you need are in the system.
Delete the entries you do not need.
4 Technical Information
4.1 Important locations for debugging in Invoice Verification - General

4.2 Creation time of currencies in LIV

Transaction currency (always! currency type = 00) and local currency (always!
currency type = 10) are determined in MM-IV.
Material ledger currencies are determined calling function modul
MRM_CURRENCIES_CREATE.
Multiple currencies are determined in FI calling function modul
AC_DOCUMENT_CREATE.
If Multiple currency is although used as Material ledger currency (example curtp
= 30) the multiple currency will not be determinded in FI again.
Currency informations will be stored in table acccr for further processes in
accounting interface.
5 Tips
Exchange Rates are derived in the function module 'READ_EXCHANGE_RATE'. The
rate KURSF is derived within the FORM DATA_FROM_DATABASE -> FORM
DATEN_BEREITSTELLEN. Database tables like TCURR and TCURF are read in the
latter form.
If more then one local currency are maintained and you enter an exchange rate
manually during invoicing, the first local currency (CURTP 10) will be
calculated with this rate, all other local currencies will be calculated using
a derived exchange rate determined by the customizing settings. A reason for
this is that only the rate between transaction currency and company currency
is stored in RBKP-KURSF.
This can lead to balances in local currencies, if they equal the first one
(CURTP 10), e.g. for some cancellation: the first local currency (e.g. USD) is
calculated from the document currency (e.g. EUR) using the exchange rate of
the original invoice, a second local currency USD is calculated with a derived
exchange rate from customizing. Hence the amounts are likely to be different.
5.1 Troubleshooting
The following table serves as a guide for the problem analysis in messages
reporting currency inconsistencies or unwanted behaviors. In most of the cases,
it has to be highlighted, these sort of messages require a deep analysis of the
situation and the final solution is an explanation of the behavior of the
system. There are very few real errors regarding this matter and the system's
calculations in almost every case are precise.
The table can be used as a help to organize the analysis of a currency related
problem.
Activity Comment
Direct/Indirect Quoted Exchange rate? Table TCURN, TA OB08
Check Translation Ratio TA OBBS
Check Settings in OB22
Exchange Rate Fixed in PO? See notes 164505 , 119651, 128, 331910
Material Price Control, S or V ?; TA MM03 See note 128, 331910
Logistics Invoice Verification or Conventional IV? See note 331910
LIV in Release 4.7? See note 331910
Material Ledger Active? TA OMX1 Notes 331910, 374496, 449277
Settings for Treatment of Ex. Rate Differences TA OMRW
Local Currency TA OBY6
Foreign Currency Translation for Tax Items - V_001_B-TXKRS TA OBY6
Document Currency TA FB03, MIR4
Additional Foreign Currencies? TA OB22
Date of PO
Date of different GR
Invoice cancel present? More than 5 decimal places? See note 499891,
162810
Dates of Invoices
Subcontract order? Price Differences? V_001K_LB-XLBPD See notes 365485,
39775, 308008
Consignment settlement order? See notes 393571, 487162, 201445
GR/IR account not cleared as customer would like? See note 331910

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