The next phase of the project is to automate the retrieval & storage of foreign exchange rate ("FX rate") data. This is used to standardise a portfolio's value to a common currency called the Base Currency.
Before diving head first into how we are going to do this, let's first understand why a Base Currency is needed and how this impact's the MVP's requirements.
The Base Currency serves as a reference point for measuring a portfolio's value when it comprises assets denominated in many currencies. And a portfolio's value is the building block to calculating its returns.
Take for example the BlackRock Global Equity Income Fund ("BlackRock Global"). From the snapshot below (of the Fund's portfolio report), we can see the Fund invests in companies from Asia, Canada, Europe, Taiwan and the United States.
To calculate the portfolio's total value in US Dollar terms, the Fund's assets are standardised to the US Dollar from their respective currencies. The totals are then summed up.
To replicate this capability, the MVP needs FX rate data and functions to do these calculations.
Another point to make is that real-time FX rate data is not needed, as the MVP serves user personas who only need to tabulate month-end valuations.
This makes a difference to the MVP's requirements as real-time market data is often expensive to procure. And I also don't want to overbuild this MVP.
--Ends
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