I don't know how US taxes work, but I have to pay tax when I do that. For example, I'm in Japan and if I buy CDN and then use it to buy GBP making a capital gai

I don't know how US taxes work, but I have to pay tax when I do that. For example, I'm in Japan and if I buy CDN and then use it to buy GBP making a capital gain, I have to report it and pay taxes on it that year. Of course, if I sell the GBP and take a capital loss, I get to report that as well. There is actually a provision for allowing a "foreign reserve", so if you are doing a lot of business in one currency and don't want to convert to yen, you can "park" it without having to pay tax. Or at least that's my understanding of it. I have an accountant that takes care of details like that for good reason.