When creating a currency in NetSuite, it is essential to define the Default Exchange Rate (to Root Subsidiary Currency). This rate establishes the relationship between the foreign currency and the base currency, serving as a foundation for various financial calculations.
Definition of Default Exchange Rate
- The Default Exchange Rate is the value of the base currency divided by the foreign currency amount.
- If using OneWorld, the rate is defined relative to the base currency of the root parent subsidiary.
Example Scenario
If the base currency is INR and the foreign currency being created is GBP, and the current exchange rate is 105.05 INR to 1.00 GBP, the Default Exchange Rate is 105.05.
This means:
- Base Currency (INR) ÷ Foreign Currency (GBP) = Default Exchange Rate
- Example: 105.05 INR ÷ 1 GBP = 105.05
Purpose of the Default Exchange Rate
- Currency Exchange Rates Table:
- The Default Exchange Rate becomes the baseline for entries in the Currency Exchange Rates table.
- These rates are used for foreign currency transactions across the system.
- Consolidated Exchange Rates Table (OneWorld):
- In OneWorld environments, this rate also forms the basis for rates in the Consolidated Exchange Rates table.
- These rates are essential for preparing consolidated financial statements.