What is Currency Revaluation (FX Revaluation)?
Restating foreign-currency balances at current exchange rates to reflect their up-to-date home-currency value.
Definition
Currency revaluation adjusts the home-currency value of assets and liabilities held in foreign currencies, such as foreign receivables, payables, and bank accounts, as exchange rates move. Because these balances were originally booked at the rate on the transaction date, period-end rates differ and create unrealised gains or losses that must be recognised. Revaluation is typically performed at each period close so the balance sheet reflects current rates, in line with standards like IAS 21 and ASC 830. It is distinct from translation, which converts an entire entity's results into the group currency for consolidation.
How Currency Revaluation Works in ERP
An ERP stores exchange rates and runs a revaluation routine at period end that recalculates open foreign-currency balances at the current rate, posting the unrealised gain or loss to the general ledger automatically. When the underlying invoice is later settled, the system records the realised gain or loss based on the actual settlement rate. Multi-currency ERPs handle this per account and currency, and many auto-reverse the unrealised entry in the next period.
ERP Vendors with Strong Currency Revaluation
Oracle NetSuite
The original cloud ERP — built for fast-growing companies
SAP S/4HANA Public Cloud
Standardised cloud ERP with quarterly auto-upgrades and low TCO
Sage Intacct
Best-in-class cloud financials for services and nonprofits
Workday
Cloud HCM + financials for services and people-centric orgs
Frequently Asked Questions
What is the difference between currency revaluation and translation?
Revaluation restates individual foreign-currency balances within an entity at current exchange rates, producing unrealised gains or losses on items like foreign receivables and payables. Translation converts an entire subsidiary's financial statements from its local currency into the group's reporting currency for consolidation. Revaluation happens within the books of one entity, while translation happens when combining entities. ERPs perform both, applying the appropriate rates and standards to each.
What is the difference between a realised and an unrealised FX gain?
An unrealised gain or loss arises from revaluing a foreign-currency balance that is still open, reflecting a paper change in value at the period-end rate. A realised gain or loss occurs when the transaction is actually settled, locking in the difference between the original rate and the settlement rate. Unrealised amounts often reverse as rates move or when the item settles. ERPs track both automatically, posting unrealised amounts at close and realised amounts on payment.