Wednesday, August 5, 2009

Converting currencies

You're doing a story comparing wages in Europe and the U.S. The European figures, of course, are in euros, and the U.S. figures are in dollars. To translate one into the other is simple: go to a typical currency conversion website, such as Yahoo's currency converter and enter the relevant boxes. That will give you today's exchange rate.

But what if you're comparing wage differences over a period of years, say between 2005 and the present? You can't use today's rate for the four years, because the rate changes--daily, in fact. And you can't simply select an arbitrary day for whatever year you're following, because the rate in January may be different from that in September. You need exchange rate averages. Here's how to get them, from a site not well known: Oanda.

In the "convert amount" box, type in the exact amount of euros (or any other currency you're dealing with).
In the "starting date" box, go to January 1, 2005.
In the "duration" box, scroll down to "year."
In the "ending date" box, go to whatever date you are writing on (in this case, today's date).
Under "base currency," scroll down to euros.
In the "quote currencies" box, scroll down to US dollar.
Then click "Get table." That will give you the average dollar amount--the average wages--for the period of 2005 through today. Readers can now tell which wages were higher during the period: European or American.

And if you want to be a bit more explanatory, do this for each year (2005, 2006, 2007, 2008 and 2009). Then you can compute the annual percentage differences for each currency: how steeply wages rose or fell each year in Europe and in the U.S.

1 comment:

Jennifer said...

Hi Nathan --
This blog is a great idea -- understanding the theories behind the number crunching is very helpful. I look forward to future posts.
Jennifer White Karp