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TITLE

Optimal Numbers of Currencies

 
TOPIC

More is not always better: optimizing the list of available currencies can improve usability and accuracy.

 
DISCUSSION

Especially on e-commerce sites, and with consideration to your specific public, you may want to consider whether offering a choice of certain less common currency units represent a useful service or if instead it just makes the list unnecessarily long and more difficult to use for the user, and the entire system more expensive and difficult to maintain for you.

If your currency data provider offers a long list of currencies (possibly including currencies which ceased to be legal tender, currencies which are updated only once per week and non-currency commodities such as gold and silver) you may want to manually remove less-used ones and locking the list of currencies in the All Currencies tab. This will ensure that no "surprise" units are automatically added, and that you will be notified if some currencies which you want to be up-to-date are not updated by a scheduled refresh.

In our experience with e-commerce and currency information sites, we noticed how a lot of interesting statistics can get lost when the data is simply added to a list and sorted by frequency. From a local perspective, transactions tend to consist of one local currency plus one or two more popular currencies. For example, as can be expected, conversions from the US dollar to the Canadian dollar and vice versa are very popular in Canada. In a similar way, the euro has established itself as a second currency in the United Kingdom and in other European countries which did not join the EMU.

To ease general-purpose implementations, within the Currency System family of software and services currencies have been grouped into three levels of "Currency Rank", reflecting popularity.

Currency Rank 3 (High Popularity)

Globally, the US dollar and the EU euro are used as a source or destination currency in more than 50% of conversion requests.

The following nine currencies (listed in alphabetical order) stand out both because of interest peaks in specific regions and because, combined, they are used in more than 90% of total requests from more than 200 countries:

  • AUD - Australian dollar
  • CAD - Canadian dollar
  • CHF - Swiss franc
  • CNY - Chinese yuan renminbi
  • EUR - EU euro
  • GBP - British pound
  • JPY - Japanese yen
  • RUB - Russian ruble
  • USD - US dollar
Currency Rank 2 (Medium Popularity)

It takes about 35 additional currencies to cover approximately 98% of total worldwide requests:

  • ARS - Argentine peso
  • BGN - Bulgarian lev
  • BRL - Brazilian real
  • CLP - Chilean peso
  • CZK - Czech koruna
  • DKK - Danish krone
  • EGP - Egyptian pound
  • FJD - Fiji dollar
  • HKD - Hong Kong SAR dollar
  • HUF - Hungarian forint
  • IDR - Indonesian rupiah
  • ILS - Israeli new shekel
  • INR - Indian rupee
  • ISK - Icelandic krona
  • JMD - Jamaican dollar
  • KRW - South Korean won
  • LTL - Lithuanian litas
  • LVL - Latvian lats
  • MXN - Mexican peso
  • MYR - Malaysian ringgit
  • NOK - Norwegian krone
  • NZD - New Zealand dollar
  • PHP - Philippine peso
  • PKR - Pakistani rupee
  • PLN - Polish zloty
  • RON - Romanian leu
  • SAR - Saudi riyal
  • SEK - Swedish krona
  • SGD - Singapore dollar
  • THB - Thai baht
  • TRY - Turkish lira
  • TWD - Taiwan new dollar
  • VEF - Venezuelan bolivar
  • XDR - IMF special drawing right
  • ZAR - South African rand
Currency Rank 1 (All Other Currencies)

We specifically recommend to be extremely cautious when considering to implement a list of "all currencies of the world". This is as difficult and expensive to achieve in practice as it may be tempting in theory.

Reasons for this include:

  • The more uncommon a currency is on the foreign exchange market, the less likely it is to be supported by some FX feeds. This is related to the trading volume of the given currency and/or to the availability of official reference data (e.g. provided by a national central bank). If there is no such data, it is more difficult to provide a meaningful exchange rate, i.e. one that has any practical use.
  • In countries for which meaningful exchange rates are difficult to find, e.g. where there are major discrepancies between official rates, street rates, bank rates, etc., the public generally already uses another major currency (e.g. the US dollar, or the euro) when doing international transactions, as in e-commerce.
  • The fact that any of the above issues apply usually reflects the stability of both the country and the currency, meaning that these currencies and codes are much more likely to require maintenance (changes in currency code or country name, redenomination, extreme fluctuations, etc.) than major currencies.

If you are interested in supporting a high number of these currencies, then the Currency Server software, which supports all currencies of the world, is probably a very good choice. Then you need to choose the individual feed(s) that will provide exchange rate data for the desired currencies.

Related Links

 
Article Information
Article ID: 13-148
Platform: All
Products: Currency Server
Additional Keywords: rankings
Last Update: 2014-02-13
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