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What is a Currency Converter?

Article Details
  • Written By: Eric Tallberg
  • Edited By: Bronwyn Harris
  • Last Modified Date: 05 November 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
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A vital tool in foreign exchange transactions, a currency converter shows the worth of one currency in comparison to another. The rate of currency conversion is predicated 24 hours a day, seven days a week, worldwide, on the foreign exchange (FOREX) market, one of the largest financial markets on earth. An estimated value of 3.2 trillion U.S. dollars (USD) changes hands daily in the FOREX market.

In more prosaic, localized and individualistic terms, a currency converter is a tool whereby a foreign traveler, or a dealer in foreign goods or services, can determine the comparative value of currencies, as well as gain access to particular foreign currency, or currencies. Thus, a traveler may have enough foreign currency on hand to begin the trip, and the dealer will be able to pay for foreign goods in the specified currency.

Virtually every major airport and cruise terminal in the world has a currency exchange office where cash currencies can be exchanged, usually for exorbitant rates, so that travelers have foreign currency at hand, if needed. To avoid the excessive fees charged by the admittedly convenient airport and terminal currency exchange offices, it is to a traveler’s advantage, especially, to find a currency converter through a local financial institution, or on the Internet.

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Though banks generally have the best currency conversion rates, with the lowest fees, Internet currency conversion sites combine convenience with what are usually reasonable fees. As well, an Internet currency converter is fairly simple to understand and use. Within moments, a traveler can gain access to foreign cash, and a dealer may set up an account pre-stocked with the appropriate foreign currency, and no need to leave the house, or the office.

The first step for accessing foreign currency via an Internet currency conversion site is to find an easy site to navigate. On entering the site, pick the currencies to be exchanged, determine the exchange rate, and order the amount of money desired. The site will then ask for your method of payment, credit card, wire transfer, checking account debit, etc. The payment method will essentially determine the fee for the transaction. Finally, determine the method for receiving the exchanged currency, wire transfer, direct deposit, cash, etc.

A word of caution is necessary here. It should be noted that most Internet currency converters will have a preset maximum and minimum amount that can be exchanged at one time. The possibility exists, therefore that the currency converter will have to be utilized a number of times if considerable sums are involved.

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