The historical exchange rate has become a household term for business owners dealing with import and export, financial, and related industries. All these industries necessitate learning not only about the currencies but also the historical rates of those currencies. It can be quite challenging to get hold of individual currencies and their historical rates, and you certainly don’t wish your business to suffer. To save time, and effort, and ensure efficacy, a historical exchange rate API comes into play. But what is it? This article will dig deep into its meaning, features, benefits, and more.
A Brief Introduction to a Historical Exchange Rate API
Before understanding everything about the historical exchange rate API, it is necessary to understand what a historical exchange rate is.
A historical exchange rate’s primary function is to offer the user enough information about the trends, information, and comprehensive data of the foreign and domestic currency throughout time. With the help of this historical data, you can also recognize the epochs of change, compare the account of numerous currencies, and analyze the potency of a specific currency over a prolonged period of time. Furthermore, the historical rates are equally helpful in forecasting future exchange rates and preparing informed decisions pertaining to currency trades. Economists, investors, financial traders, export and import businessmen, and related ones can greatly benefit from the historical exchange rates.
An API or Application Programming Interface links two different programs for enabling thorough communication with each other. This is technically a sort of software interface presenting a service to additional pieces of software. With the help of the API exchange rate, it becomes quite manageable to gather all the previous data that will make your operations smooth.
Do You Actually Need a Historical Exchange Rate API?
An exchange rate API Java is important for numerous reasons. First and foremost being able to know the history of a particular country through its currency. Now, to understand this, you need to know what affects exchange rates.
The primary factors that affect the exchange rates are inflation, economic evolution, interest rates, and more. When an economy matures, the country’s currency is ought to grow as well leading to appreciation in value as compared to related currencies. Investors consider these growing economies worth investing in, and this simultaneously boosts the demand for that currency.
Inflation directly impacts the exchange rates and leads to currency devaluation. An upsurge in inflation results in the devaluation of the value, and a devalued inflation can lead to the currency appearing more attractive to investors. The interest rates are also related to the change in exchange rates - an increase in interest rates leads to a currency being more attractive to investors and also leads to an increase in value.
Furthermore, global events like natural disasters, wars, trade wars, and similar cases equally affect exchange rates. Now, with the help of a historical exchange rate API, you can very well understand the background of the country. You will be able to understand if the currency previously experienced any appreciation or depreciation, or undergo any global event. Accordingly, you will be able to make your organizational decisions based on the forecasts.
The comparison of historical with real-time exchange rates is the perfect way to set your business goals. Since exports/imports, financial sectors, and similar industries mostly deal with foreign countries and their money, it is always helpful to have enough idea about their history as well. Proper usage of the historical exchange rate API might save your business from numerous risks.
Features to Consider While Choosing An Historical API Exchange Rate
There are plenty of platforms offering exchange rate APIs, but you need to fix the right one. Below are some of the topmost features that your historical exchange rate API needs to possess.
1. Data of Numerous Countries: Your API needs to offer currencies of more than 100 countries, just like Fixer API which offers data from 170 countries which are also updated every 60 seconds.
2. Dedicated and Robust: Your API needs to be robust, promise availability, offer scalable volumes, and respond in milliseconds.
3. Reliable Sources: This is important, the API needs to extract information from reliable sources like European Central Bank, and similar trusted financial data providers. There is no point trusting the data if it’s not from reliable sources.
4. Encryption: The API needs to guarantee encryption by implementing bank-level security like 256-bit SSL and so.
All in all, historical exchange rate API is important in diverse businesses for effortlessly conducting operations. Exchange rate API might be the best way to have a thorough understanding of whether you should invest in a particular currency after considering its history. The above details about the exchange rate, its need, and features to consider while choosing the perfect platform will indeed be beneficial while working.