Foreign exchange revaluation isolates valuation changes caused by exchange-rate movements from the transactions recorded in financial flows. It applies when assets or liabilities denominated in a currency other than the euro change in euro terms solely because that currency’s exchange rate has moved. The adjustment removes this non-transactional effect, so flow data reflect economic activity rather than fluctuations in the translated value of existing balance-sheet positions.
Source: European Central Bank (ECB) (source). This glossary entry is an independently worded adaptation of the cited information.