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I was trying to convert the preexisting currency type field into formula type.But when i am clicking convert data type salesforce is not giving option of formula type in choose list. I know creating new field again as formula type is one of the solution, but i was wondering is there any limitation of sales force for this, when i am not getting option of conversion of preexisting currency field into formula field.

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Yes, it's a limitation of the platform. There's several general categories of fields, and a field can never leave that category. Formulas are one such category, as are relationship fields (lookup/master-detail). Roll-up summary fields are yet another category, and then there's the "normal" data types, such as text, phone, number, etc.

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