On 13 November 2025, the International Accounting Standards Board (IASB) issued 'Translation to a Hyperinflationary Presentation Currency (Amendments to IAS 21)'. The amendments are effective for annual periods beginning on or after 1 January 2027, with earlier application permitted.
The scope of the IASB’s considerations was limited to entities with presentation currencies of hyperinflationary economies. As a result, the amendments have no effect on the requirements for entities that present their financial statements in the currency of non-hyperinflationary economies but that have foreign operations with functional currencies of hyperinflationary economies.
Translation from a non-hyperinflationary functional currency to a hyperinflationary presentation currency
The amendments to IAS 21 require an entity with the functional currency of a non-hyperinflationary economy but the presentation currency of a hyperinflationary economy to translate all amounts in its financial statements, including comparatives, at the closing rate at the date of the most recent statement of financial position.
When the entity’s presentation currency ceases to be the currency of a hyperinflationary economy and its functional currency continues to be the currency of a non-hyperinflationary economy, the entity applies prospectively (without restatement of the comparative amounts) the method currently applicable to such situations under IAS 21.
Translation of non-hyperinflationary foreign operations by entities with hyperinflationary functional and presentation currencies
Having considered the expected costs and benefits, the IASB also decided to include an exception to the translation method above for affected entities that apply IAS 29 Financial Reporting in Hyperinflationary Economies and are required to translate the results and financial position of a foreign operation whose functional currency is that of a non-hyperinflationary economy. In these circumstances, the entity is required to restate the comparative amounts of that foreign operation included in the entity’s previously issued financial statements by applying the general price index it applies to corresponding figures for the previous reporting period in accordance with IAS 29:34.
Disclosure requirements
The entity would have to disclose that it has applied the method, including summarised financial information about its foreign operations translated applying the proposed translation method; it would also have to disclose if the economy concerned ceased to be hyperinflationary.
The amendments are effective for annual reporting periods beginning on or after 1 January 2027. They would have to be applied retrospectively with certain transition provisions.
For additional information, please see iGAAP in Focus – IASB publishes amendments to IAS 21 on translation to a hyperinflationary presentation currency.
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