A compiler (or interpreter) detects source language instructions performing arithmetic operations using a fixed point format (preferably packed decimal). Where the operation can be performed without loss of precision or violation of other constraints of the source language, the compiler automatically converts the operands to a floating point format (preferably Decimal Floating Point (DFP)) having hardware support, and re-converts results to the original fixed point format. Preferably, the compiler may combine multiple operations and instructions in an expression tree, analyze the tree, and selectively convert where possible. The compiler preferably performs a heuristic cost judgment in determining whether to use a particular conversion.