How is Zakat calculated on foreign currency deposits when it is disbursed in local currency? Is it according to the exchange rate at the time Zakat is disbursed, or based on the average rate throughout the year?

Deposits that accrue interest (such as investment certificates) are purified by giving 2.5% of the principal amount as zakat (definition). The interest earned from these deposits must be disposed of by spending it on charitable causes, as it is unlawful. It is not permissible to delay zakat once it becomes due. As for deposits in Islamic banks, they are subject to a different zakat ruling.