Exchange Rates

Understanding currency exchange rates is critical for international trade and capital transactions, as they determine the value of one currency in relation to another.

Now, let's consider a practical scenario to illustrate the importance of these rates in business operations. You operate a business in India, and a customer from the United States places a $5000 order. Checking the current exchange rate of $1 = ₹80, you calculate the order's value at ₹4,00,000. Post-shipment, the exchange rate changes to $1 = ₹85, resulting in a foreign exchange gain of ₹5 per dollar.

You can easily handle such scenarios in ERPNext. You can configure your primary operating currency in 'Company'. Then configure the exchange rates to be obtained from one of the three sources:

1. Third-Party Apps: ERPNext can automatically fetch exchange rates from publishers like frankfurter.app or exchangerate.host

2. Fixed Exchange Rate: You can configure specific exchange rates to be used in the 'Currency Exchange' DocType.

3. Allow users to manually input the currency exchange rates to be used in each transaction.