Transactions on invest. in foreign currency : some thoughts

[Djobydjoba]

Hi Mark,

When we have to record a transaction on an investment in foreign currency :

1) The value of the transaction in local currency is always known;
2) The exchange rate used by the broker may or may not be known (for my experience, usually, it isn't deliver by the broker);
3) The value of the transaction in foreign currency may or may not be known too.

A fact : in FM, a transaction has to be recorded with values in the currency of the investment (value and price), i.e. in the foreign currency.

If the exchange rate and the value in foreign currency are not known, the steps to record a transaction are :
1) find the exchange rate for the day of the transaction, by opening the exchange investment and track down its price for this transaction day ;
2) multiply this exchange rate with the transaction value in local currency to find the transaction value in foreign currency ;
3) record the transaction with this value in foreign currency and the number of shares, and let FM auto-calculates the share price.

This is the way I do to be sure the value in local currency will be perfectly correct when exchange rates are adjusted. I hope these steps are correct, and if they are, here's an idea to make the steps and calculation quicker and less manual :

When recording a transaction on an investment in foreign currency, there could be an option on the transaction window the user could activate – only if the exchange rate exists for the foreign currency and at the transaction date – that would let him record the transaction with values in local currency. FM would then convert itself values to foreign currency.

Another idea : in the transaction window, the exchange rate at the transaction date could be displayed, and eventually overridden by the user in the case the broken would have communicated the exchange rate really used.

The problem with exchange rates is if they are modified in the exchange rate investment, value of the transactions already recorded in this currency can become erroneous in local currency, which is really indesirable. The problem can occurred when we decide to change the source of the rate. For example, I want now to download the rates on Bloomberg servers. Until now, I was importing manually rates from the European Central Bank. But these rates are not exactly the same. If I make the mistake to download from Bloomberg the historical exchange rate, the value in local currency for my transactions can become erroneous. So the conclusion is that, perhaps, the exchange rate should be memorized with the transaction in the investment file at the moment the transaction is recorded.

Djoby

[Mark]

Hi Djoby,

Thanks for the feedback. I do agree it would be best to include the exchange rate with the transaction. Another reason for this is that sometimes you may have multiple transactions on the same day, with different exchange rates. It might be good to make this an option, so you could either record the exchange rate with the transaction if you want, or leave it empty to use the default global exchange rate from your exchange rate investment.

[Djobydjoba]

Hi Mark,

I do agree it would be best to include the exchange rate with the transaction. Another reason for this is that sometimes you may have multiple transactions on the same day, with different exchange rates. It might be good to make this an option, so you could either record the exchange rate with the transaction if you want, or leave it empty to use the default global exchange rate from your exchange rate investment.

I hope this change could be made in the future. IMHO it's one of the only design flaws of FM regarding operations recording.

What bothers me is I can't change the source for my exchange rates investments (an import from a file from the European Central Bank, to Bloomberg quote server) because if I overwrite the historical data the value of all my transactions in local currency will be wrong. I have to stick with the source primarily chosen, and pray that there isn't an import problem that screws all my converted values..

Thanks and keep up the good work !

[Mark]

Hi Djobydjoba,

Okay, thanks for the feedback.

[Djobydjoba]

Hi Mark,

I love the implementation of the specific exchange rate in transactions, new in v12.

For all my existing transactions in foreign currencies, I've just ticked "Specify Exchange Rate to Default". The exchange rate was already pre-filled in this field, with the value from the corresponding exchange rate investment. So I can now change the server from which exchange rates are downloaded without the risk to mess all transactions values. So easy ! Great.

In the future, for all the new transactions, I will tick systematically "Specify Exchange Rate to Default", to add the exchange rate with the transactions. I think it's a more "secure" way to do. But I’ve noticed that for a new transaction, the value in the Specify Exchange Rate to Default field is not pre-filled. It has still to be retreived manually in the corresponding exchange rate investment. This field is pre-filled only for already recorded transaction. Could it be pre-filled for new transactions as well?

A general preference to add by default the exchange rate with all new transactions ("Specify Exchange Rate to Default" pre-filled and pre-ticked) would be handy too.

Thanks.

[Mark]

Hi Djobydjoba,

Thanks for the feedback. Do you normally get your transaction exchange rate from your broker, or from the exchange rate investment? It sounds like you are wanting to just use the exchange rate investment number as a default.

As a tip you might want to use... If you create the transaction without checking "Specify Exchange Rate to Default", and then edit the transaction again, it will pre-fill in the exchange rate number, so you can then just tick this option on.

[Djobydjoba]

Do you normally get your transaction exchange rate from your broker, or from the exchange rate investment?

Only from the exchange rate investment, because I don't download any transactions from my broker, I can't.
And yes, you're right, what I want is that the operations don't rely on the values in the exchange rate investment, because a mistake in it can ruin the operations values.

As a tip you might want to use... If you create the transaction without checking "Specify Exchange Rate to Default", and then edit the transaction again, it will pre-fill in the exchange rate number, so you can then just tick this option on.

Yes, I know this one, but It needs two steps. Why not pre-fill the exchange rate at the creation, with the value in the exchange rate investment ?

Not a big deal though.

[Mark]

Hi Djobydjoba,

I understand your usage of this feature, although I thought the main reason for using this feature would be when your transaction happens at a rate different than the retrieved end of day exchange rate.

We could pre-fill that exchange rate field for new transactions. It would probably be better if it auto-updated as you changed the transaction date, except if you manually type something in that field. It would be similar to the way we auto-update the price field.

[Djobydjoba]

Hi Mark,

We could pre-fill that exchange rate field for new transactions. It would probably be better if it auto-updated as you changed the transaction date, except if you manually type something in that field. It would be similar to the way we auto-update the price field.

Pre-fill the exchange rate for new transactions, with an auto-update according to date transaction would be perfect. For me, I would only have to tick the field to record the exchange rate with the transaction. For others, who want to specify another rate, this would give them the information of what the value from the exchange rate investment is, before override it.