Cost basis in foreign investments

If you track or own investments in a foreign currency, where 'foreign' is any currency which is not your BASE currency (Article 337), then you may notice that even if the price of the investment is unchanged, the value of the investment can and does change on a daily basis.

This occurs because the investment is quoted in another exchange rate, and the value floats dependent on the exchange rate between your base currency and the foreign currency.

Microsoft Money does not maintain a currency exchange rate history, and so a $1000 investment will report as being worth £571.43 if the US$:UK£ rate is $1.75:£1, but £588.24 if the rate changes to $1.70:£1

The cost basis of an investment therefore is dependent on the prevailing exchange rate at the time it is calculated, and NOT the exchange rate used to purchase the investment, i.e., it floats.

Microsoft say that this is by design.

Category: Investment

Keywords: cost basis, foreign