Here is a Xero article explaining how Xero works.
It uses Xe.com data.
In summary you can:
- Add as many currencies as you like
- Transact in different currencies (invoices, bills, bank accounts)
- Run reports in different currencies (PL, BS etc)
How to convert a manual journal to AUD
What Xero can't do is convert a manual journal from a foreign currency into AUD.