Currencies and Exchange Rates

Currencies

Parent currencies are the main currency units; for example, US Dollar or British Pound. Child currencies are smaller currency units; for example, US Cent or British Pence.

A new installation of MineMarket includes the following preconfigured currencies:

  • AUD (Australian Dollar)
  • CAD (Canadian Dollar)
  • CLP (Chilean Peso)
  • EUR (Euro)
  • USD (United States Dollar)—The default currency in new installations

These preconfigured currencies can be edited and deleted; however, the default currency cannot be deleted.

MineMarket builds a look-up table of currency information based upon the culture information found on the machine. Any custom cultures installed on the machine are not included.

Exchange Rates

Foreign exchange rates are used to determine relative amounts in the primary or secondary currencies.

Exchange rates are provided by a network of banks and exchanges, where each bank or exchange publishes their own rate.

In MineMarket, the exchange rate is applied from the buyer's point of view. To set up buying and selling rates, set up two sources to reflect the different exchange rates.

A new installation of MineMarket includes the following preconfigured exchange rate sources:

  • COMEX (Commodity Exchange, Inc.)
  • Exchange Rate Source—The default exchange rate source in new installations
  • LME (London Metal Exchange)
  • LSE (London Stock Exchange)
  • NYSE (New York Stock Exchange)
  • SHFE (Shanghai Futures Exchange)
  • SSX (Sydney Stock Exchange)
  • TSE (Tokyo Stock Exchange)

These preconfigured exchange rate sources can be edited and deleted; however, the default exchange rate source cannot be deleted.

You can also use the Fixed Exchange Rates screen to override any rates from an applicable exchange rate source.

Forward Exchange Rates

If actual exchange rates are not available, forward exchange rates can be used in despatch order snapshots and contract quota snapshots to estimate future currency values in invoice previews. Estimation with forward exchange rates is applicable to revenue line items related to sales and purchase contracts, and to revenue and cost line items related to service, finance service and freight contracts. This exchange rate estimation method must be enabled and selected in the despatch order snapshot settings. Only actual exchange rates are used in invoice calculations.

In MineMarket, forward exchange rates are within an exchange rate forward curve series. Each series specifies an exchange rate source, the source and destination currency and the source and destination multi-maturity interest rates.

Each forward curve within the series has a spot exchange rate, which is the exchange rate specified for the currency pair in the exchange rate source. MineMarket calculates forward exchange rates for the following predefined forward periods:

  • Tomorrow
  • 1-Week, 2-Week, 3-Week
  • Each month from 1-Month to 11-Month
  • 1-Year

The formula to calculate forward exchange rates is:

FFX = SFX * [ ( 1 + SIR * Days / 360 ) / ( 1 + DIR * Days / 360 ) ]

Where:

  • FFX = Forward Exchange Rate
  • SFX = Spot Exchange Rate
  • SIR = Source Interest Rate
  • DIR = Destination Interest Rate

The source and destination interest rates are interpolated if the forward period does not correspond directly with a maturity period in the interest rate series. For example, multi-maturity interest rate series do not have a value for two weeks. The interest rate is interpolated from the 1-Week and 1-Month interest rates to calculate the 2-Week forward exchange rate.

If the display mode is View By Pip, the difference between the calculated exchange rates and the spot rates display.

Example: Consider a 90-day forward contract for USD / EUR exchange. The spot rate and interest rates are as follows:

  • Spot rate = 1.4000 USD/EUR
  • USD 90-day LIBOR = 3.50%
  • EUR 90-day Euribor = 4.50%
FFX = 1.4000 * (1 + 0.035 * 90 / 360 ) / (1 + 0.045 * 90 / 360 )
FFX = 1.3965 USD/EUR