3.2.8 Specifying Exchange Rate Variance
When a loan involves a currency conversion the rates defined for the Rate Type, that has been specified for the product, it is taken up by default (examples for Rate Type could be cash rate, borrowing rate, lending rate, and so on). This default can be changed.
- Normal variance
If the exchange rate variance exceeds the exchange rate for the Rate Type by this value (normal variance), then the system asks you for an override before proceeding to apply the exchange rate.
- Maximum variance
You cannot apply an exchange rate on a loan, involving the product that you are creating, that is greater than the value that you specify as the Maximum Variance. If the exchange rate exceeds the standard rate by the maximum variance you have defined for the product, then the system does not allow you to store the contract.
Example
You have specified the normal variance as 3% and the maximum variance as 6% for Product LD01.
Now, if you apply an exchange rate on a loan involving LD01 that varies from the applicable rate maintained for the day by less than 3%, the system does NOT display an override message.
If you apply an exchange rate on a loan involving LD01 that varies from the Standard Rate by between 3% and 6%, the system displays an override message.
If you apply an exchange rate on a loan involving LD01 that varies from the day's rate by more than 6%, the system does not store the loan.
Note:
The exchange rate variance is a percentage.Parent topic: Setting Product Preferences