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At the date a foreign currency transaction occurs, each asset, liability, revenue, expense, gain, or loss arising from the transaction is recorded in the functional currency of the recording entity using the exchange rate in effect at that date.

Summary. Currency value is determined by aggregate supply and demand. Supply and demand are influenced by a number of factors, including interest rates, inflation, capital flow, and money supply. The most common method to value currency is through exchange rates.

Investing. Holding foreign currency in an investment portfolio also can generate taxable gains and losses. Losses are fully deductible from ordinary income, without limits, and gains are taxable at ordinary income rates.

For US dollars and INR the value is ficed through floating exchange rate, i.e the market forces of demand and supply for each currency determines the exchange ratio. The value of one currency is expressed in terms of another.

You would enter the information on Schedule 1 (Form 1040) Additional Income and Adjustments to Income, Line 8 as an ordinary gain or (loss).

The value of your Rs 500 note keeps changing every day because the Reserve Bank of India buys and sells various currencies to maintain control of the demand and supply of the rupee so that its value stays intact. Moreover, monetary policy changes, like the repo rate or the liquidity ratio, also affect the rupee value.

A currency's strength is determined by the interaction of a variety of local and international factors such as the demand and supply in the foreign exchange markets; the interest rates of the central bank; the inflation and growth in the domestic economy; and the country's balance of trade.

The change in foreign currency translation is a component of accumulated other comprehensive income, presented in a company's consolidated statements of shareholders' equity and carried over to the consolidated balance sheet under shareholders' equity.

In the case of foregin exchange, effect of changes in exchange rates on cash & cash equivalences should be reported as a separate part of 'reconciliation of changes in cash' during the relevant period.

The value of a currency, like any other asset, is determined by supply and demand. An increase in demand for a particular currency will increase the value of the currency, while an increase in supply will decrease the currency's value. The exchange rate is the value of one country's currency in relation to another.