What Is an International Currency Converter?

An international currency converter is an electronic program or online application that allows for the quick conversion of currencies and their exchange rates. Also known as universal currency converters, these programs typically use the most recent market prices in the foreign exchange market.

Key Takeaways

  • An international currency converter is an app or web tool that allows for the quick conversion using the exchange rate of one currency into any other currency.
  • Currency converters typically use the most recent market prices in the foreign exchange market.
  • International currency converters are use useful to tourists, multi-national businesses, and forex traders.

Understanding International Currency Converters

International currency converters are usually free of charge when found online, and are useful when determining how much of your home currency or base currency you will need to exchange for a foreign currency.

Often, people will use international currency convertors to help them determine how much of a base currency they might need while traveling overseas. For example, if U.S. residents travel to England, they might need to exchange U.S. dollars for Great Britain pounds (GBP/USD). An online currency converter could be used to determine how much base currency would be required to buy a predetermined about of the foreign currency.

They can convert the value of one currency to another, for example converting from dollars to euros. Generally, every country has its own currency. One notable exception is the euro, which is the currency used by most of the countries which are part of the Eurozone.

Often, travelers will purchase currency the currency of their travel destination in exchange for their local currency at a currency exchange, which is a financial institution that has the legal right to exchange one currency for another. 

Currency convertibility is essential in a global economy and critical for international commerce and finance. A currency that is inconvertible poses big barriers to trade, foreign investment, and tourism.

International Currency Converters and Currency Exchanges

While travelers might use online international currency converters to determine how much of their home currency they should travel with, the actual exchange of currencies will generally happen at a currency exchange, many of which are found at airports.

International currency converters generally use recent prices on the foreign exchange market. A currency exchange, or bureau de change, however often adjusts the exchange rate a little or takes a commission so that it can make a profit from the transaction.

This value is often a little different from the international currency exchange rate, which is the amount of money in one currency that can be exchanged for one unit of another currency. Currency exchange rates are generally either floating or pegged. Floating exchange rates fluctuate based on a variety of factors, while pegged rates are fixed to other currencies.

Because airports are the last port of call for travelers, the exchange rates at these currency exchanges are often more expensive for individuals than those at banks or exchange counters not located within airports.

Online currency exchanges, while they do exist, are primarily for forex brokers. The different websites and apps that serve this purpose generally charge a nominal fee.