diff --git a/src/components/MoneyRequestConfirmationList.tsx b/src/components/MoneyRequestConfirmationList.tsx
index fe2a67ad21b75..e7867bc53572b 100644
--- a/src/components/MoneyRequestConfirmationList.tsx
+++ b/src/components/MoneyRequestConfirmationList.tsx
@@ -315,21 +315,25 @@ function MoneyRequestConfirmationList({
     const customUnitRateID = getRateID(transaction);
 
     const subRates = transaction?.comment?.customUnit?.subRates ?? [];
+    const prevSubRates = usePrevious(subRates);
     const defaultRate = defaultMileageRate?.customUnitRateID;
 
     const mileageRate = DistanceRequestUtils.getRate({
         transaction,
         policy,
         ...(isMovingTransactionFromTrackExpense && {policyForMovingExpenses}),
+        isMovingTransactionFromTrackExpense,
         policyDraft,
     });
-    const rate = mileageRate.rate;
+    const distanceRate = mileageRate.rate;
+    const distanceUnit = mileageRate.unit;
+    const calculateFromTransactionData = isMovingTransactionFromTrackExpense && !distanceRate;
+    const unit = calculateFromTransactionData ? transaction?.comment?.customUnit?.distanceUnit : distanceUnit;
+    const rate = calculateFromTransactionData ? Math.abs(iouAmount) / (transaction?.comment?.customUnit?.quantity ?? 1) : distanceRate;
+    const currency = calculateFromTransactionData ? iouCurrencyCode : (mileageRate.currency ?? CONST.CURRENCY.USD);
     const prevRate = usePrevious(rate);
-    const unit = mileageRate.unit;
     const prevUnit = usePrevious(unit);
-    const currency = mileageRate.currency ?? CONST.CURRENCY.USD;
     const prevCurrency = usePrevious(currency);
-    const prevSubRates = usePrevious(subRates);
 
     // A flag for showing the categories field
     const shouldShowCategories = isTrackExpense
diff --git a/src/components/MoneyRequestConfirmationList/DistanceRequestController.tsx b/src/components/MoneyRequestConfirmationList/DistanceRequestController.tsx
index acd924e61e5dd..01d6be663648d 100644
--- a/src/components/MoneyRequestConfirmationList/DistanceRequestController.tsx
+++ b/src/components/MoneyRequestConfirmationList/DistanceRequestController.tsx
@@ -168,9 +168,7 @@ function DistanceRequestController({
     }, [customUnitRateID, transactionID, lastSelectedRate, isDistanceRequest, isPolicyExpenseChat, isMovingTransactionFromTrackExpense, transaction, policy, selectedParticipants]);
 
     useEffect(() => {
-        if (!isDistanceRequest || (isMovingTransactionFromTrackExpense && !isPolicyExpenseChat) || !transactionID || isReadOnly) {
-            // We don't want to recalculate the distance merchant when moving a transaction from Track Expense to a 1:1 chat, because the distance rate will be the same default P2P rate.
-            // When moving to a policy chat (e.g. sharing with an accountant), we should recalculate the distance merchant with the policy's rate.
+        if (!isDistanceRequest || !transactionID || isReadOnly) {
             return;
         }
 
@@ -203,11 +201,9 @@ function DistanceRequestController({
         translate,
         toLocaleDigit,
         isDistanceRequest,
-        isPolicyExpenseChat,
         transaction,
         transactionID,
         isReadOnly,
-        isMovingTransactionFromTrackExpense,
         getCurrencySymbol,
         isManualDistanceRequest,
     ]);
diff --git a/src/libs/DistanceRequestUtils.ts b/src/libs/DistanceRequestUtils.ts
index be513d8b6de11..b42cfb8cfa0d2 100644
--- a/src/libs/DistanceRequestUtils.ts
+++ b/src/libs/DistanceRequestUtils.ts
@@ -357,12 +357,12 @@ function getCustomUnitRateID({
         return customUnitRateID;
     }
 
-    // For TrackDistanceExpense we will return the default rate of the policyForMovingExpenses.
+    // For TrackDistanceExpense we will return the default or last selected rate of the policyForMovingExpenses.
     if (isPolicyExpenseChat || isTrackDistanceExpense) {
         const distanceUnit = Object.values(policy.customUnits ?? {}).find((unit) => unit.name === CONST.CUSTOM_UNITS.NAME_DISTANCE);
         const lastSelectedDistanceRateID = lastSelectedDistanceRates?.[policy.id];
         const lastSelectedDistanceRate = lastSelectedDistanceRateID ? distanceUnit?.rates[lastSelectedDistanceRateID] : undefined;
-        if (!isTrackDistanceExpense && lastSelectedDistanceRate?.enabled && lastSelectedDistanceRateID) {
+        if (lastSelectedDistanceRate?.enabled && lastSelectedDistanceRateID) {
             customUnitRateID = lastSelectedDistanceRateID;
         } else {
             const defaultMileageRate = getDefaultMileageRate(policy);
@@ -409,6 +409,7 @@ function getRate({
     useTransactionDistanceUnit = true,
     policyForMovingExpenses,
     isFakeP2PRate,
+    isMovingTransactionFromTrackExpense,
 }: {
     transaction: OnyxEntry<Transaction>;
     policy: OnyxEntry<Policy>;
@@ -416,6 +417,7 @@ function getRate({
     policyForMovingExpenses?: OnyxEntry<Policy>;
     useTransactionDistanceUnit?: boolean;
     isFakeP2PRate?: boolean;
+    isMovingTransactionFromTrackExpense?: boolean;
 }): MileageRate {
     let mileageRates = getMileageRates(policy, true, transaction?.comment?.customUnit?.customUnitRateID);
     if (isEmptyObject(mileageRates) && policyDraft) {
@@ -429,7 +431,8 @@ function getRate({
     const defaultMileageRate = getDefaultMileageRate(policy);
     const customUnitRateID = getRateID(transaction);
     const customMileageRate =
-        (customUnitRateID && (mileageRates?.[customUnitRateID] ?? mileageRatesForMovingExpenses?.[customUnitRateID])) || (isUnreportedExpense ? undefined : defaultMileageRate);
+        (customUnitRateID && (mileageRates?.[customUnitRateID] ?? mileageRatesForMovingExpenses?.[customUnitRateID])) ||
+        (isUnreportedExpense || isMovingTransactionFromTrackExpense ? undefined : defaultMileageRate);
     const mileageRate = isCustomUnitRateIDForP2P(transaction) || isFakeP2PRate ? getRateForP2P(policyCurrency, transaction) : customMileageRate;
     const unit = getDistanceUnit(useTransactionDistanceUnit ? transaction : undefined, mileageRate);
     return {
diff --git a/src/pages/iou/request/step/IOURequestStepParticipants.tsx b/src/pages/iou/request/step/IOURequestStepParticipants.tsx
index 36a5770b5173f..c909ada64cbf6 100644
--- a/src/pages/iou/request/step/IOURequestStepParticipants.tsx
+++ b/src/pages/iou/request/step/IOURequestStepParticipants.tsx
@@ -201,6 +201,7 @@ function IOURequestStepParticipants({
                 isTrackDistanceExpense: isDistanceRequest(transaction),
                 policy: policyForMovingExpenses,
                 isPolicyExpenseChat: false,
+                lastSelectedDistanceRates,
             });
             setCustomUnitRateID(transaction.transactionID, rateID, transaction, policyForMovingExpenses);
             const shouldSetParticipantAutoAssignment = iouType === CONST.IOU.TYPE.CREATE;
@@ -238,6 +239,7 @@ function IOURequestStepParticipants({
         isActivePolicyRequest,
         backTo,
         policyForMovingExpenses,
+        lastSelectedDistanceRates,
     ]);
 
     const addParticipant = useCallback(
@@ -269,8 +271,8 @@ function IOURequestStepParticipants({
             }
 
             if (!isMovingTransactionFromTrackExpense || !isPolicyExpenseChat) {
-                // If not moving the transaction from track expense, select the default rate automatically.
-                // Otherwise, keep the original p2p rate and let the user manually change it to the one they want from the workspace.
+                // If not moving the transaction from track expense to a workspace, select the default rate automatically.
+                // Otherwise, keep the original rate and let the user manually change it to the one they want from the workspace.
                 const rateID = DistanceRequestUtils.getCustomUnitRateID({reportID: firstParticipantReportID, isPolicyExpenseChat, policy, lastSelectedDistanceRates});
 
                 if (draftTransactions.length > 0) {