Does it matter how many FX rates we load into our ERP?

Does it matter how many FX rates we load into our ERP?

It is important to carefully consider which currency exchange rates you actually need when choosing which ones to load into your ERP.  Whilst loading more FX rates than you require may appear to be harmless, it can cause unexpected problems.

Why limit the number of rates loaded?

We would recommend that if you need rates for USD to 20 other currencies, it is better to load only those 20 rates, rather than getting rates for USD to every other currency available from your rates provider.

This is a real-life example seen recently by FXLoader Support.

  • A client uses 38 different currencies. From their chosen rates source, they fetch USD to all others, i.e. 37 rates. Then they triangulate to obtain all possible combinations – 1406 different rates are now being loaded. Whilst they will use many of these rates, there will be many more that are not actually needed. One of the unnecessary rates was VEF>KWD and this was where the error occurred – Venezuela’s currency was such a low value compared to Kuwait’s that the rate was 0.00000 when rounded to 5 decimal places. The zero rate caused the whole run to crash and the client got no rates at all until we’d worked out what the problem was.

Additionally, some clients ask us to load USD with every available currency, just in case they need a new currency in future. However, this would include many ‘exotic’ currencies which are the least likely to be needed, but the most likely to cause problems, such as rates becoming unavailable. So, an error in a rate that you never use can cause the entire run to fail.

How does FXLoader help streamline the number of rates?

FXLoader allows individual currencies to be flagged as ‘Base’ currencies, which can be useful for reducing the number of rates loaded. This can be illustrated by the scenario below.

  • You have a currency set of 30 currencies – you need rates for USD to all others, EUR to all others, and GBP to all others. However, you don’t need any of the “cross-rates” for currency pairs which don’t include USD, EUR or GBP (for example CAD>AUD).
  • If you simply load rates for every possible combination, you will end up with 870 rate pairs (30×29). But you actually require only 87 rate pairs (3×29).

The way to achieve this in FXLoader is to set USD, EUR and GBP as Base currencies; and then load from ‘All Base’ to ‘All Enabled’ currencies.

FXLoader also allows several different currency sets to be used in the same job, which gives even more flexibility to load precisely the rates you want, without having to load any that you don’t need.

To get rates from your chosen source, FXLoader carries out a ‘Fetch’ stage. You can have several different Fetch stages within the same job, which is another way of streamlining the number of rates loaded.

Need more advice on choosing which rates to load? Contact us on [email protected].