IASB issues Amendments to IAS 21

On 13 November 2025, the IASB published amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates. The aim of the amendments is to clarify how entities should translate financial statements from a non-hyperinflationary currency into a hyperinflationary presentation currency.

The amendments to IAS 21 stem from a request submitted to the IFRS Interpretations Committee in 2020. The request sought clarification on how the results and financial position of a foreign operation should be translated from a non-hyperinflationary functional currency into the parent entity’s hyperinflationary presentation currency. Additionally, this situation is to be treated in the same manner as the translation of an entity’s own financial statements from a non-hyperinflationary functional currency into a hyperinflationary presentation currency.

The amendments to IAS 21 now clarify that:

• when an entity translates amounts from a functional currency that is the currency of a non-hyperinflationary economy to a presentation currency that is the currency of a hyperinflationary economy, the entity translates those amounts, including comparative amounts, using the closing rate at the date of the most recent statement of financial position.
• when the entity’s presentation currency ceases to be hyperinflationary and the entity’s functional currency continues to be the currency of a non-hyperinflationary economy, the entity applies prospectively the currently existing IAS 21 requirements for such cases, without restating comparative amounts.

An entity shall also disclose that it has applied this translation method in its financial statements, or in the results and financial position of its foreign operations. For these foreign operations, the entity shall present summarised financial information.

Additionally, the IASB has introduced an exemption from the above translation method for entities that apply both IAS 21 and IAS 29 and need to translate the results and financial position of a foreign operations under the amendments.

The amendments to IAS 21 apply to annual reporting periods beginning on or after 1 January 2027 and are to be applied retrospectively, considering certain transitional provisions.

The amendments are available exclusively from the IASB and are subject to a fee. Further information is available on the IFRS Foundation website.