Configuring Revaluation

This section describes the configuration options the system offers in Revaluation:

• Revaluation is controlled using a set of parameters that are specified at the application level and defined in the REVALUATION.PARAMETER file.
• FX revaluation processing uses the Reval Rate or Mid Reval Rate field from the CURRENCY table (as defined for a particular currency, accordingly), based on the value in the Reval Rate field in REVALUATION.PARAMETER.
• If Reval Rate field in REVALUATION.PARAMETER is set to Yes, but if Reval Rate field from the CURRENCY table is not defined then the value in Mid Reval Rate field from the CURRENCY table is defaulted.
• Reval Rate field of currency table can be input only for Currency markets 1-9.

• The internal account corresponding to the exchange adjustment is defined in the ACCOUNT.CLASS file.
• The Rebate (RH) method of revaluation uses FORWARD.RATES table to determine the forward rate that covers and converges to spot rate.
• The revaluation profit or loss can also be booked to profit loss account at the net present value, based on a parameter option in REVALUATION.PARAMETER. The net present value is calculated by discounting the deal level profit or loss at an appropriate discount rate. This is the rate of interest from the PERIODIC.INTEREST table.
• The revaluation profit and loss (PL) can be reported using the same attributes as the corresponding foreign currency (FCY) asset and liability being revalued. This can be done by configuring the Al Reval Gain Loss field in the REVALUATION.PARAMETER and CONSOLIDATE.COND tables to construct the PL key during revaluation.
• If the booking for revaluation PL is at the level of ASSET&LIAB, then the Al Product Component field is used to determine the location of the product category within the CRF key. This product category is recorded in the revaluation PL generated during the revaluation of the foreign currency (FCY) asset and liability.

  

  The field name in CONSOLIDATE.COND of the variable component is the only input that is allowed in the Al Product Component field. The variable component that is defined must also be a valid component in the CONSOLIDATE.COND (ASST&LIAB) table.