Double Foreign Currency Exchange?

[MDAnderson]

One of my Portfolios is in Euros. However, the investments in this portfolio are in numerous currencies. I created sub-portfolios for each currency, listed the various investments in the respective native currency, used exchange rate investments in the main Portfolio, and it works like a dream. (The brokerage also has separate sub accounts for each currency, with the overall statement in Euros, so it works.)

However, I now have a situation that has me a bit perplexed. This new investment trades in Korean won, so I post all activity in KRW. But the brokerage placed it in the USD sub-account, so transaction values convert to dollars as we receive dividends, buy, sell, etc. The monthly statement is in Euros, so this investment's NAV is converted a second time.

How can I tell the investment to value convert to USD for transactions, but convert to Euros for NAV when I run the month-end report?

Because the investment is an equity, prices are updated EOM from Bloomberg...and it trades in KRW.

Wait... Can I list the investment in the USD sub-portfolio, set up a forex in the USD account that exchanges KRW to USD, then rely on the main portfolio forex USD to EUR to grab that one too? Just thought of that while I was typing...this is why I usually call you LOL!

[Mark]

Hi MDAnderson,

If you put this KRW investment in the USD account, and you have exchange rates defined for both KRW -> EUR and USD -> EUR, Fund Manager will know how to take the right amount in/out of your USD cash investment, based off the combination of these 2 exchange rates. Basically, it is converting from KRW -> EUR and then EUR -> USD to determine the amount to add/subtract from your USD cash account.

All your exchange rates are global, they aren't defined on a sub-portfolio basis. The currency of your default cash account is assigned on a sub-portfolio basis, so whatever the global exchange rates are between the source investment's currency and the target default cash account's currency will be used.

[MDAnderson]

Just to clarify...I should enter the new investment in the USD sub account. Mark the currency of the new investment in KRW. (The default cash in the USD sub-portfolio is USD.)

Then create the forex KRW->USD with the rest of the forex investments in the Master Portfolio.

So when I post dividends in KRW to the investment, they will convert to USD.
But when I look at the entire portfolio in an exchange-rate adjusted report, I'll see the value in EUR (I already have USD->EUR created).

I'll try it and will let you know if I have any issues. Thank you!

[Mark]

Hi MDAnderson,

One correction... In your case you don't have a KRW -> USD exchange rate. You define all exchange rates to your 1 default currency, which for your case is EUR. So, you need to have a KRW -> EUR exchange rate and you should also have a USD -> EUR exchange rate. Both of these are specified under "Options / Currency Settings...". You don't have an exchange rate specified between 2 non-default currencies. All rates are between that currency and the default.

When FM needs to convert between KRW and USD, it does so by combining KRW -> EUR and the inverse of USD -> EUR.

[MDAnderson]

Got it. Thanks for the clarification, it worked and I only had to tweak the share price a little to compensate for both exchanges. Forex is tricky, and I'm glad we can go out 6 places to align the pennies. Rocking software man, good job. Thanks again.