Explain the difference between group currency, parellel currency, hard
currency and index based currency. Explain the context in which we use these.
Definition for different currencies:
Object currency - CO - A currency defined in the master record of a
Controlling object (cost center, internal order, and
so on). When you create a Controlling object, the controlling area currency is
defaulted as the object currency. You can change this.
Transaction Currency - the currency in which a business transaction is
processed and booked. The business transaction can be posted in the transaction
currency as well as in the local currency. This can occur when the trading
partners use different local currencies. The transaction currency can differ
from the controlling area currency and the object currency. The SAP system can
perform currency translations using a predefined average exchange rate.
Hard currency - Hard Currencies are used in countries with high inflation to
improve the value of transaction. When a
hard currency is selected, the document is automatically updated in the local
currency and the hard currency. The config for hard currency is done at the
Group Currency - Group currencies are defined at the client level in table
T000. Group currencies are used to enable
cross-company postings in controlling for company codes that use different
company code currencies.
Index –Based Currency - Index based currencies are used for statutory
reporting purposes for subsidiaries in some countries
that have an extreme amount of inflation.
Parallel currency - For company code, we may have one local currency and up
to two parallel currencies in the system. All
documents are posted in both the local and parallel currencies. A hard currency
is one type of parallel currency.