Investors & landlords

From what  I understand, you need to pay taxes on the interest income annually, regardless of the currency. Convert the interest earned annually to USD and report as ordinary income... even if the principal is losing value due to currency devaluation.

Once you pull the principal out and convert it to USD is when you utilize section 988 to claim loss of value of principal (and past interest earned) due to currency devaluation... as ordinary loss.