What is the difference between a functional currency and a presentation currency under IAS 21?

Under IAS 21, the functional currency is the currency of the primary economic environment in which the entity operates (where it generates and expends cash). It cannot be changed arbitrarily. The presentation currency is the currency in which the financial statements are presented. While an entity has only one functional currency, it can present its financial statements in any presentation currency it chooses by translating its results using closing, historical, and average exchange rates.