If you have never used a currency converter before, you might be wondering what they actually do. There are certainly plenty of them online, but what are they for? What benefits do they bring? And would it make life easier if you knew how and why to use one?
Put simply, a currency converter enables you to transfer one currency into another using the most current exchange rates. Some of them are more advanced and they will also allow you to see what the exchange rates between various currencies were on days, weeks and sometimes possibly years gone by.
Needless to say, lots of financial and currency related websites will have a currency converter somewhere on the site. But you will find them on many travel websites as well, as they can be extremely useful in that situation.
Most online currency converters consist of several simple boxes. You just need to put the required amount of information in each one.
For example, let’s say you want to find out how many British pounds you would get in exchange for a hundred US dollars. What you would do is to enter ‘100’ into the appropriate box, and select the two currencies in the other two boxes. The one thing you need to be sure of is that you enter the correct currencies into the correct boxes.
This should be easy enough to do, as they are usually labelled ‘from’ and ‘to’. So in this case you would make sure you select the ‘from’ value as US dollars and the ‘to’ value as British pounds. That’s all you need to know to get the conversion you want.
Using a currency converter has plenty of advantages. It can even help you find out where you might want to go on holiday this year! Whatever country you live in, an online currency converter will quickly and easily tell you how much of every other currency in the world your own currency will get you.
When you take this information and use it together with the cost of living in each country, you will soon see how far your own money will go.
Currency converters are also handy if you frequently shop online. If you find a website in another part of the world that sells something you want to buy, you can take the price plus shipping and enter it into a currency converter. This will then tell you how much you will be paying in your own currency for that item.
Currency codes aren’t as complicated as they might initially sound. Basically every single currency can be identified by a three letter code. So for example, the British pound is represented by GBP and the US dollar is represented by USD. Normally the first two letters correspond to the country and the last one corresponds to the currency. The currency code JPY relates to the Japanese yen, with JP for Japan and Y for yen.
They are used to make it easier to distinguish between different currencies. For example there is more than one dollar in the world - think of the US dollar, the New Zealand dollar, the Australian dollar, the Canadian dollar and the Jamaican dollar for instance! Having a specific worldwide recognisable code for each one means there is no confusion when people are looking for a particular currency.
Currency trading is not for the inexperienced or the faint hearted. You may also see it referred to as Forex trading - this is a shortened term for foreign exchange trading.
But regardless of how it is described, the basic idea is to exchange one currency for another one. It always works with pairs, i.e. two currencies at a time. And in this market you will always have a number of currencies that are rising or falling against one another at any point in time. What currency traders try to do is to predict which ones will rise and which ones will fall. They will then buy specific currencies at a cheaper level and sell them when they reach a higher level, thus making themselves a profit.
It sounds easy but there is a lot more to it than this. A single event can lead to one or more currencies falling in value, and that could mean you will lose money in an instant. A large number of people lose a lot of money when they first enter the Forex market. You need to learn how it all works and perhaps buy and sell on an imaginary basis first to get the hang of it all.
As you can see, being able to use a currency converter online has many benefits. It also allows you to make quick conversions for many different reasons, and you know the information will be updated to the most recent exchange rates the website has.
So if you haven’t used a currency converter before, perhaps now is the time to give it a go.