There are many currency converters available for comparing currency rates. The best currency converter will be one that provides up to the minute exchange rates in an easy to read format and follows standard procedure for quoting currencies. The best currency converter will allow traders to gain a quick snap shot of the currency markets while trading a given currency pair. The best currency converter will be an asset to companies doing business internationally in that it will provide both the spot rate and the forward rate for all major currency pairs. The spot rate of exchange is the rate for purchase and delivery of a currency today. The forward exchange rate is the exchange rate that is quoted and traded today but refers to payment and delivery on a specified date in the future.
The best currency converter will follow protocol for quoting currencies. In quoting and in trading currencies there is a base currency in which terms the other currency is quoted. The quoted currency is actually called to quote currency. The standard procedure for choosing which currency is the base and which is the quote follows this list.
Thus the US dollar is always quoted in terms of the Euro, the Yen in terms of the US dollar, the Swiss franc in terms of the pound, and so forth. When each currency is listed in the other category the convention is to use the weaker currency as the base so that the exchange rate is greater than 1. That having been said nations such as Great Britain and Japan commonly use their currency as the base currency for trading on home soil. When a quote is made using a nation’s home currency as the quote currency the quote is known as a direct quotation or price quotation. Here the home currency is always listed as 1.00. When the home currency is the unit currency, 1.00, it is known as a direct quotation or quantity quotation. This sort of quote is common in newspapers in the British Commonwealth as well as the EU. The best currency converter will allow the user to choose the means of delivering the quote in order to make things clear to the user.
The best currency converter will also follow standard convention in the number of decimal places used for the quote currency. When values are close the standard is four decimal places for spot transactions with the last being referred to as a pip. It is common to issue quotes to six decimal places for forwards and swaps. There was some variation to this routine when it took 1,000 units of one currency to match 1 unit of another. More recently large international banks have become quoting all transactions with at least four decimal places. The best currency converter will allow the user to see rates quoted in an updated fashion. The last job for the best currency converter is to provide buy and sell quotes as these represent the real world currency spread present in Forex markets.