Euro vs Dollar exchange rate: An historic event?

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I recently read a Washington Post article about the euro versus the dollar, and I wanted to analyze the data myself to see whether the article was simply stating the facts, or "sensationalizing" things.

The washingtonpost.com article started with the headline, "This is historic: The dollar will soon be worth more than the euro." And the article had the following graph showing the value of the euro dropping:

original_graph

Based solely on the title and the graph (which is probably all that most people look at), I assumed that the exchange rate had always been about 1.25, and had recently started dropping towards 1.00, and that this was an unprecedented historic event. But as I read the details in the article, I started to become a bit more skeptical, and decided to find the actual data, and plot it myself.

Before we get down to business, here's a picture of some euros and dollars my friend Margie just happened to have ...

euro_dollar

And now, let's get to the SAS analysis! ... I went to the federalreserve.gov website, and found the raw data...

euro_rate

They displayed the data in an html table, so I wrote a SAS job to read the html code directly from their web page, and parse out the data values. I then used Proc Gplot to create a graph very similar to theirs (both the visual colors and style, and the years covered). And, sure enough, my graph showed the same thing (ie, the exchange rate hovered around 1.25 during that time period, and had a recent drop heading towards 1.00).

dollar_versus_euro

But, being a natural skeptic and a Curious George, I wondered if the data prior to 2012 told the same story? The Federal Reserve table contained data back to year 2000, so I tweaked my Gplot code a bit to plot all the data. And would you look at that - the euro was worth less than a dollar back in 2000-2003! So, while the sudden rate of the recent drop might be 'historic' a euro being worth less than a dollar is not a new or unique event.

dollar_versus_euro1

Now a question for you economists - who is it good for, and bad for, when the value of the euro falls against the dollar?

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About Author

Robert Allison

The Graph Guy!

Robert has worked at SAS for over 25 years, and is perhaps the foremost expert in creating custom graphs using SAS/GRAPH. His educational background is in Computer Science, and he holds a BS, MS, and PhD from NC State University. He is the author of several conference papers, has won a few graphic competitions, and has written a book (SAS/GRAPH: Beyond the Basics).

12 Comments

  1. gordon Keener on

    It's good for American tourists in Europe!

    Japan, too. The dollar's about ¥120 now. It was under ¥80 not too long ago.

    Q: What was the exchange rate when the euro was first introduced? Was it 1:1 against US$? I don't remember.

  2. Hi Robert, can you reply specifically as to how you were able to read data from an internet page. Or maybe write another blog page? Is it as simple as creating a filename pointing to a web page? What do you do if there is more than one table on a page? Do you need anything other than SAS Foundation in order to do it? What does the code look like? Thank you

  3. Great graph - however I should point out that the Euro didn't exist before 1 January 1999 and was only used as an accounting currency until 1 January 2002 when the first Euro denominated notes and coins went into circulation to replace the individual Eurozone nations currencies. With such a short history it seems a little over-dramatic for the Washington Post to describe a drop below parity with the dollar as "historic" :-)

  4. Pingback: Is Greece in hot water, financially? | The SAS Training Post

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