If I add another currency to my PayPal account, say Euros, does PayPal automatically convert the amount received to US Dollars and add that amount to my balance or do I need to perform some action to make this conversion happen for each payment received?
If you receive a different currency than you own and you have added that currency to your paypal balance then it will show in your balance in that currency.
To withdraw it to your bank account you would need to convert it by clicking on (>) icon next to your paypal balance > manage currencies > currency conversion (fees apply).
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