Currency Converter Calculator - Convert Currencies on the Fly
Use our free and extremely easy to use online currency converter calculator to convert any major currency to another with one single click.
People and organizations exchange currencies on daily basis for the purpose of international trade, tourism, trading, hedging and thousands of other reasons, making Forex market the biggest market in the world. The purpose of currency converter calculator is to convert value of one currency into the value of another currency, based on the exchange rate. Since the Forex market is actually open 24/7, you can expect exchange rates to fluctuate rapidly. It is therefore very important to deal with live rates, especially if you are involved in daily business like for example day trading. For those of you who just plan a trip abroad or some business with foreign company, real-time exchange rates are not necessary.
Following you can find a currency converter calculator, which is free to use and offers you to convert some of the major global currencies with real-time exchange rates provided by Easy Forex. The use of calculator is very straightforward. You should enter the amount of your base currency you would like to convert into the foreign currency. Select the base currency (From), select the foreign currency (To) and press the Convert button. The result of currency conversion will be shown to you in the box bellow. You can visit the Easy Forex website for more information about conversions and other information related to Forex trading. Bellow the currency converter calculator you can read about why are foreign currency exchange rates that important for global investor, while you can read about factors influencing foreign currency exchange rates in a separate article.
How Exchange Rates Determine Your Portfolio Return?
If you are a domestic trader only, meaning you only buy and sell securities on domestic stock markets in local currency, foreign currency exchange rates do not affect you directly. But nowadays, it is hard to imagine any investor not taking care about global diversification of his portfolio to manage the risk accordingly. If you are located in U.S. your domestic currency is U.S. dollar ($). When you decide to buy some European stocks, you actually need to have Euro currency to do that. Normally stock brokers perform exchange of one currency in another when it comes to investing on foreign markets and they charge a fee for the conversion. But you as investor must understand that you actually bought some shares in EUR and not in USD. This fact can significantly influence your portfolio return. Let's explain why.
For the purpose of explanation how foreign currency exchange rate influences your portfolio return, let's say you have bought 100 shares of German pharmaceutical company Bayer AG on the Frankfurt Stock Exchange. Each share was worth exactly 50 Euros in the transaction concluded and at that exact time one Euro was worth exactly 1.40 U.S. dollars (for your next trades you can use the currency converter calculator on this site for the purpose of such calculations). This means your broker will charge you $7,000 for the transaction if we exclude fees in this simplified calculation (100*50*1.4=7,000). Your broker will always calculate all of your transactions in your base currency, which is usually also your domestic currency.
Now, after three months time, the price of Bayer stock is trading at 60 Euros, which is 20% above your buying price. Your first thought is, I have earned 20% on my investment. That is great! But wait! You need to check what happened to EUR/USD exchange rate in the same period. Suppose that Euro has lost significantly because of the financial crisis in some of the European crisis and is now worth only 1.10 U.S. dollars. You have to calculate the value of your investment worth in U.S. dollars, since this is the currency you spend in and pay bills. 100 shares x 60 EUR/share x 1.10 exchange rate = $6,600; You find out, that you actually did not make a profit but a loss of -$400, which is about -6% in relative terms.
Now you see how important it is to use currency converter calculator for correct valuing of your portfolio?
Written by: Goran Dolenc
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