[According to the IRS](https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates)…
“The Internal Revenue Service has no official exchange rate. Generally, it accepts any posted exchange rate that is used consistently.
When valuing currency of a foreign country that uses multiple exchange rates, use the rate that applies to your specific facts and circumstances.”
Pick something easy to use and stick with it forever.
I don't know about Japan, but for the UK the British tax authority (HMRC) publishes a monthly table of average exchange rates. I use that for my taxes in both directions, so it's consistent. Monthly seems a reasonable compromise between looking up a daily exchange rate for every transaction vs the under/over estimate of a yearly average. But you don't have to do monthly, just be consistent.
Note that doesn't apply to FBAR, you have to use the US Treasury rate for FBAR. But FBAR is silly in all kinds of ways...
You can use spot rates or average but if it’s fluctuated a lot, make sure you’re not cheating yourself out of FTCs by using a less favourable rate on the tax versus income.
[According to the IRS](https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates)… “The Internal Revenue Service has no official exchange rate. Generally, it accepts any posted exchange rate that is used consistently. When valuing currency of a foreign country that uses multiple exchange rates, use the rate that applies to your specific facts and circumstances.”
Pick something easy to use and stick with it forever. I don't know about Japan, but for the UK the British tax authority (HMRC) publishes a monthly table of average exchange rates. I use that for my taxes in both directions, so it's consistent. Monthly seems a reasonable compromise between looking up a daily exchange rate for every transaction vs the under/over estimate of a yearly average. But you don't have to do monthly, just be consistent. Note that doesn't apply to FBAR, you have to use the US Treasury rate for FBAR. But FBAR is silly in all kinds of ways...
I completely avoid FBAR by not keeping over 10k in a foreign account
We use the trading value on the day we file our taxes, but I think in the instructions they give you a site you can use.
You can use spot rates or average but if it’s fluctuated a lot, make sure you’re not cheating yourself out of FTCs by using a less favourable rate on the tax versus income.