Exchange Rate Methodology
World economies constantly change. ORC is sensitive to how these factors affect expatriate pay and is committed to ensuring our data is based on up-to-date information from reliable sources.
Expatriates should not be affected —positively or negatively—by fluctuations in currency. That’s why ORC continually evaluates how exchange rates move for all ORC home-country/assignment-location combinations by tracking, each week, the exchange rates listed by Reuters. These rates—the average of the buy and sell rates—are then used as the exchange rates in our international compensation tables. Alternative sources, such as the Wall Street Journal, may also be used.
In general, ORC updates international compensation tables at least four times a year. In most locations, two of these updates reflect both new pricing surveys and new currency exchange rate information; the other two reflect a currency update only.
However, in higher inflation locations, ORC conducts pricings more frequently. Further, a change in the exchange rate above a specified level triggers the issue of new table data for any location affected by the change. Tables are updated if the exchange rate fluctuates by at least:
- +/- 3 percent from the rate used in the last published ORC table and remains that way for at least four consecutive weeks
- +/- 6 percent and remains that way for at least two consecutive weeks
As a result, ORC frequently releases new data more often than four times a year.
ORC may also schedule an additional or expedited pricing if an event takes place that ORC believes will alter assignees’ cost-of-living level, such as:
- Introduction or increase of a value-added, sales, or goods and services tax
- Natural disaster that might affect the availability and costs of goods and services
- Closing or opening of a major retail outlet that is popular among the expatriate community