A Look At The Currency Converter

Posted by Allison on 13 April 2009, 11:08

If you use your computer frequently and you tend to go on holiday abroad almost every year, then you will probably be very familiar with the number of currency converters available online.

But it's not just holidaymaker's that have a use for the humble currency converter.  Anyone with an interest in buying and selling money through the foreign exchange (otherwise known as Forex trading), as well as some business people, will have a regular need to convert amounts from one currency to another.

So what exactly is a currency converter?

A currency converter, as its name would suggest, enables us to change one currency into another quickly and easily without having to work out the calculation ourselves.  Needless to say this makes what would otherwise be a tough job much easier to handle, and for people who have a regular need to use one – such as Forex traders – being able to have a currency converter on your desktop, or simply bookmarked as one of your favourites to revisit as often as you like, is a huge benefit.

How does a currency converter work?

If you take a look at the various types of currency converter that are available online, you will see that while they all have their differences (and on the surface of it they can be laid out rather differently) they all essentially perform pretty much the same function.

You are usually prompted to enter your relevant information by choosing your currencies from the drop down boxes provided.  The first one will indicate the currency you are starting with, and the second one will indicate the currency you want to convert it into.

You will then need to enter the amount of the currency you are starting with, so that the currency converter can calculate how much that particular amount of money in that currency is worth in the second currency you have selected.

Once you have filled in the boxes and made your choices you will be able to click on the calculate button and receive the information you wanted.

Do you have to visit a website to use one?

While there are many different and highly professional websites offering various designs of currency converters for you to choose from, this isn't always a practical choice.  For example if you need to use one on a daily basis and for some reason the website you normally choose is not available, you would either have to search around for another one or wait until it came back online.

Fortunately there is an alternative.  It is relatively easy to go online and find currency converter software that you can install on your own computer, ready to use whenever you need it.  While all currency converters are essentially pieces of software designed specifically for this purpose, some people make them available free of charge for other people to download and use themselves. 

In this case you can install the software wherever you find it most useful – which for most people is right on their desktop.  You will usually have to download the latest currency exchange rates when you need them, but it does depend on the converter you use.

Are there any other types of currency converter?

Another version of the normal type is becoming more popular, and this is the one that allows you to look up historical rates that applied at a specific time in the past.

Not all currency related websites have these, although some are arguably better at providing accurate and detailed historical rates than they are at provided up to date ones.  This is because they have more data to draw from and they are designed more for this purpose than for any other.

It is certainly true to say that some websites have concentrated more on providing historical data than others; quite often it can depend on the nature of the website.  One which offers details of up and coming holidays has no real reason to offer historical exchange rates, and so their converters will be purely up to date and nothing else.  Conversely, those people who need to know trends in conversion rates to help them calculate which currencies they should be buying and which ones they should be selling are better off going to sites which have several years' worth of historical exchange rate data to draw on.

The history of the currency converter

Before the days of the internet you would have had to work out currency conversions yourself using a trusty calculator and relying on the information in your local newspaper or other such source.  Getting access to instantly updated information would have been virtually impossible by today's standards; short of making a phone call to a professional in the know (and even then the rates would have changed again as soon as you got off the phone and started making your calculations) you wouldn't have been able to get the pinpoint accuracy that we take for granted today.

Once the internet started to reach more and more people and gradually become a thing of everyday life, it was only a matter of time before someone thought of creating a piece of software that worked everything out for you and made it possible to simply tap a few keys on your computer keyboard to get the exact exchange rate and figures you needed for that precise moment in time.

Today, there are lots of websites that carry information about currencies, the world markets and other related topics that have a clear need to have their own currency converter on site.  While many of these make their currency converters available to other webmasters for free insertion onto their own website (thus giving them a nice free source of publicity at the same time) many established websites choose not to use other people's converters, and instead create their own.

If you start to delve into the history of the currency converter as far as online use is concerned, the year 1995 keeps coming up over and over again.  It should be remembered that while it seems as though the internet has been with us forever, it was only around the mid-Nineties that it really started to become more widespread and become accessible to more and more people.

With this development, more and more companies started to get their own websites and develop online businesses that appealed to rapidly increasing audiences.

Two of the biggest currency websites online today, the world famous Xe.com and Oanda.com, both saw a need to present currency information online.  Everyone knew that financial markets changed by the second, and up until that point there had been no real way to make any kind of service available to the public that could be updated constantly.  Until the internet came along, the technology simply wasn't in place.

And so the race was on to develop a range of services that could be used by anyone who had a computer and an internet connection.  The leading sites quickly realised that being able to provide an up to the minute (or even up to the second as they are now) currency converter would really enhance their websites considerably, and so that is what they set out to do.

At that time the thought of supplying historical rates was still very much in the future, but there is no doubt that things were starting to progress.  The birth of the online currency converter in the mid-Nineties meant that more and more people could benefit from this free service, and once word spread that such a tool was available, it naturally became more popular – as did the websites that were able to provide them.

Xe.com and Oanda.com (while not being the only currency related websites online by any stretch of the imagination – there are hundreds when you count them all) are the market leaders in this field, and offer a range of professional and currency related services that all concentrate on the financial field.

Xe.com certainly saw the benefits of having a currency converter on their site, and the ever increasing popularity of this program that was built into the website meant that their site increased in visibility, as more and more people accessed it and search engines of all descriptions started pushing them up their rankings.  Even today this particular site comes out on top of most major search engines.

It would be a while later that historical exchange rates would come into play, and indeed even now some websites in this field only offer current rates of exchange on their currency converters, and don't offer the option of being able to delve back into history to see what was happening on any particular day in the past.

But for those sites which have gone to the trouble of providing a historical converter, the results have arguably been worth it, as they have attracted a whole new audience which needs this data to make decisions based on today's money markets. 

Quite often the data contained in the historical converters has a limited history.  Most of the sites only go back to the mid-Nineties, with some managing 1990 as the earliest date for which data is available.  In other cases where data is included for dates going back further than this, it is usually contained in tables rather than being of searchable form in an actual program.

But one thing is clear – the development and history of the online currency converter has played a key role in shooting many sites towards online success, as they have found a big market to tap into that keeps coming back for more.

The impact of the currency converter on our lives

The currency converter, like many things in our lives, is one of those applications that we tend to take for granted nowadays.  They are freely available, it is a simple matter of typing in the data that is relevant to our query, and we only have to wait for a few seconds to receive the results.

But while it is an easy to use and versatile tool, it has still had a huge impact on our lives as a whole.  Which of us doesn't plan to go on holiday to a foreign country that uses a different currency and checks to see what our own currency converts into before we book our break away?

If you are into foreign exchange dealing then a currency converter will be an essential part of your every day routine – and that goes for the historical version of it as well.  What would you do if the converters suddenly ceased to be available?  It would certainly make your task a lot harder when it comes to looking at past trends and trying to work out where you should put your money in the future.

As with most things that have become part of our everyday lives, currency converters online have somewhat been taken for granted now.  We can even have one on our desktop, ready and waiting whenever we need it and it won't cost us a penny to get it there.  Thanks to the sites that started it all back in the mid-Nineties, more and more people have caught onto the idea that perhaps their website could benefit from having a currency converter too, and whether that converter is borrowed from another site or they have their own one designed, it clearly becomes a key part of any financially led website.

So we can see that the history of the currency converter, while being quite a short one of little over a decade, has been nothing short of a resounding success.  It has found its way into our online lives and doesn't look set to go anywhere else in the near future.

And that is undoubtedly a good thing, because it is hard to imagine what we would do without it.  Somehow using a standard calculator and doing it all yourself doesn't seem to be enough, does it?