Currencies basics
Squirrel manages transactions amounts at two levels: the account's currency and the application's base currency. You usually edit amounts in the account's currency. Squirrel then automatically calculate how much the transaction is worth in your base currency. The algorithm used to achieve this is fairly complex but relies on simple rules to reflect how much a transaction in a foreign currency is really worth.
How is the base currency amount calculated?
The exchange rate used to calculate how much each transaction is worth in your base currency is constantly updated. This rate depends on:
- the initial exchange rate of the account
- the exchange rates of the incoming transfers
If you have an account in Japanese yen, and that your base currency is the US dollar:
- As of January 1st, you have ¥10,000. You have set the initial exchange rate to 76.92. Squirrel calculates that you have $130.00 in this account.
- On January 10, you spend ¥5,000. Squirrel understands that's worth $65.00, whatever the exchange rate USD/JPY is at that date.
- On January 20, you transfer $70.00 to your Japanese account. It ends up as ¥5,000. You now have ¥10,000 again on your account representing $135.00.
- On February 1st, you spend ¥5,000 again. Squirrel calculate it now represents $67.50.