# Closing rate

> The spot exchange rate on the last day of the reporting period, used to translate a foreign subsidiary's assets and liabilities.

Source: https://finconsol.com/blog/glossary/closing-rate/ (updated 28 October 2026)

## Why does it matter in a group?

Every foreign subsidiary's assets and liabilities are translated at the closing rate, so the group balance sheet shows them at what they are worth in the group's currency on the last day.[1](#src-1) Income and expenses use the [average rate](/blog/glossary/average-rate/). The gap between the two lands in the [translation reserve](/blog/glossary/translation-reserve/). Use one closing rate per currency for the whole group. Two rates for one currency is the commonest cause of a difference in an [intercompany reconciliation](/blog/glossary/intercompany-reconciliation/). Name the source of the rate, for example a central bank, in the close calendar, so that nobody picks a rate by hand.

## A small example

Palmridge ends September 2026 with net assets of AED 13,905,000. At the closing rate of 0.2040, the group shows them at GBP 2,836,620.

## Sources

## Sources

1. IAS 21 [The Effects of Changes in Foreign Exchange Rates](https://www.ifrs.org/issued-standards/list-of-standards/ias-21-the-effects-of-changes-in-foreign-exchange-rates/), paragraph 39.