Under FRS 102, functional currency is defined as the ‘currency of the primary economic environment in which the entity operates’. Those with significant overseas transactions or interests may need to refer to the detailed guidance in Section 12.

Primary indicators (paragraph 30.3)

(a) The currency:

(i) that mainly influences sales prices for goods and services (this will often be the currency in which sales prices for its goods and services are denominated and settled); and

(ii) of the country whose competitive forces and regulations mainly determine the sales price of its goods and services.