# Currency exchange



## chuck846 (Jan 15, 2016)

We are just an aging couple living in Mexico. Not investment bankers etc.
We have over the last few years moved a chunk of our retirement saving from the US to Mexico. A sizable amount.
This morning the USD/MXN spot rate is 18.08.
When we purchased our house (for cash) - with money we exchanged - the spot rate was around 13.60.
The money which we have in Pesos is sitting in the bank and I report all interest earned on our US taxes (less the taxes we pay here in Mexico).
At a minimum we have paid at least 1% exchange fee from banks/brokerages to move the money to Mexico.
I use Quicken to keep track of our accounts. Recently - after perhaps a year - I updated the value of our Pesos which the program uses and was SHOCKED at how much our Mexican pesos have dropped in value. Perhaps 25% in the last year alone.

Is there any recourse tax wise ? And - should I be reporting our Mexican bank holdings as some sort investment ?

Thank you.


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## Bevdeforges (Nov 16, 2007)

If it's a plain old bank account - where you just put your money in and the bank pays you interest (or doesn't) - then for US tax purposes, you report the interest you have been paid for the year. You convert the interest payments at either the spot rate on the date of payment or at the average rate for the year. 

However, the amount in your account can fluctuate all over the place when converted to US dollars. You use the annual average rate (usually) to convert when you're reporting the high balance on your FBARs. But any gain or loss on the conversion from one date to another doesn't figure into your US income tax at least.
Cheers,
Bev


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