Once the currency has been created within Currency Codes Setup, the exchange rate for each currency is defined within Currency Period Rates Setup. A currency period rate is the rate used to convert a value in one currency its equivalent value in another currency. The currency conversions are always calculated via the pivot currency, and so the rates are always expressed from the pivot currency to another currency.
Period rates are defined using Currency Period Rates Setup (CNP). They are defined for a currency combination; a From Currency and a To Currency where the From currency must be the pivot currency.

For example, to convert a sterling value (GBP) into US dollars you need to define a currency period rate for the GBP-USD currency combination, if GBP is the pivot.

Many different period rates can be defined for the same currency combination. They can be defined for any combination of:

For example, for the GBP to USD currency combination you may wish to define a different rate for each accounting period, and another set of rates defined for each accounting period that only applies to balance sheet accounts.

You can define a global rate for the currency combination by leaving the accounting period and account code range blank. This global rate is used as a default rate to apply to all periods and accounts. It is not necessary to define a rate to convert a currency to itself.