Convertibility meaning - Convertibility of a currency implies that a currency can be converted into another currency without any limitations or any control. A currency is said to be fully convertible, if any currency can be converted into some other currency at the prevailing rate of exchange. Now the issue is why we need to convert one currency in terms of another. This can be explained with the help of a simple example. If a person in India wants to purchase some commodity from the U.S. then he will have to pay the seller in US dollars. Thus, he needs to convert rupee in terms of US dollar.