FX Rates

Ken kmailuk at gmail.com
Sat Jan 8 14:16:28 EST 2011

On 8 January 2011 18:21, Mike Alexander <mta at umich.edu> wrote:
> You can't really chain currency conversions since there is "friction" in
> them.  Converting USD->GBP->EUR isn't the same as converting USD->EUR.
>  However GnuCash already ignores this to some extent since it uses inverse
> conversions.  If it has a USD->GBP conversion I think it uses it to convert
> GBP->USD which isn't really legitimate either.

Yes, but if USD/GBP and GBP/EUR exchange rates are available but
EUR/USD is not available, then (USD/GBP * GBP/EUR)^-1 is a very good
proxy. Hence, GnuCash could use 0-jump conversions where available but
allow for 1-jump conversions where necesary. I can't imagine 2-jumps
being of much additional benefit in the vast majority of situations,
but the logic would be the same.

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