When filing your FBAR you will need to use the average exchange rate for the specific foreign currency during the tax year. You can find the average exchange rates for each currency on the IRS website.
For example let’s say you kept your money in a Canadian bank account during the 2017 tax year. The average exchange rate for the Canadian dollar during that time was 0.7644. So if you had 100 Canadian dollars in your account at the end of the year it would be worth $76.44 in U.S. dollars.
Remember you will need to use the average exchange rate for the entire tax year even if you only kept your money in the foreign account for part of the year. So if you opened the account in May and closed it in December you would still use the average exchange rate for the entire year.
You can find the average exchange rates for each currency on the IRS website.
If you have any questions about using the correct exchange rate you can contact the IRS directly.
What is the name of the process used to calculate the foreign currency adjustment factor?
The process is called the “Fully Basket Approach.
What is the FBAR?
FBAR is the Foreign Bank Account Report.
It is a report that is filed with the US Department of the Treasury by US citizens or resident aliens who have financial interest in or signature authority over foreign financial accounts.