Inside the Currency Market: Mechanics, Valuation, and Strategies

Rollovers

In the United States, rollover interest is debited or credited to accounts at 5:00 p.m. eastern time for positions held overnight. This process began in 1994 to settle spot prices so a standard system of exchange rates could be established to settle old contracts and enter into new agreements. The prior time was 4:00 p.m. in conjunction with the New York Stock Exchange close, but changed to 5:00 p.m. in later years.

At 5:01, the opportunity to gain interest is lost until the next trading day at 5:01 p.m. Rollover interest works based on interest rates, short and long term. Suppose a trader is long Australian dollar/U.S. dollar, meaning a trader bought the Australian dollar and sold the U.S. dollar pair. The interest rate in Australia ...