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QuoteWerks Knowledgebase Topic (Article ID 6320)

Converting Native Currency back to Foreign

This information applies to :

Article ID
6320

Created/Updated
August 18, 2006

Category
Support

Issue:

I have some products that I purchase from a foreign country and which I use the "Base of Foreign Curreny" feature. The money converts fine to my currency, however, when I try to convert it back, the numbers are slightly off.

For example:
(Foreign Currency is USD and local currency is GBP)

Convert USD to GBP and then back to USD

Cause:

This is caused by math calculations that occur during the conversion and rounding process.

Explanation and Solution:

An example of the math calculations that take place:

Convert To Rate:Take 100.00 and multiply it by 1.5556 and round it to the nearest hundredth - ( This equals - 155.56)

Conversion Factor: Now take 1 divided by 1.5556 to get the reciprocal of the conversion factor - ( This equals 0.64283877603497042941630239136025, which rounded to the nearest thousandth equals 0.643)

Convert From Rate: Now multiple 155.56 and multiply it by 0.643 - > ( This equals 100.02508, and when rounded, equals 100.03)

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As you see, the original amount was 100.00, however, in the process of converting the number back, the amount changed to 100.03 - close, but not exact.

The solution is to set the Convert From exchange rate to match the reciprocal of the Convert To exchange rate. Note: This will not always return the exact value that you are looking for, however, it will return the closest possible value.

For example:

Let's say that your USD "Convert To" rate is 1.5000

You will need to set you USD "Convert From" rate to 0.66666666666666666666666666666667. This number is calculated by dividing 1.5000 by 1. (This is how you get the reciprocal value of the exchange rate.)

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