Rollover Rate (Forex)

Rollover Rate (Forex)

The net interest return on a currency position held by a trader. The rollover rate converts net currency interest rates, which are given as a percentage, into a cash return for the position. Since a trader is long one currency and short another, the net effect of both interest rates has to be calculated.

In forex, a rollover means that a position is extended at the end of the trading day without settling.

For example, an investor has a long 100,000 EUR/USD at a rate of 1.3000. The EUR interest rate is 2%, or a daily rate of 0.0054%, and the USD is 3% or a daily rate of 0.0081%.

The interest on the EUR is (100,000 * 0.0054%) 5.40 EUR; the USD costs (130,000 * 0.0081%) 10.53 USD. Converting the EUR to USD, 5.40 * 1.3000 = USD 7.02. The net USD amount is 7.02 - 10.53 = - 3.51, which is divided by the 100,000 position. On a long EUR/USD position, the rollover costs 0.00003562, or 0.3562 pips.


Investment dictionary. . 2012.

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Look at other dictionaries:

  • Rollover Credit — Interest paid to a forex trader who holds a position overnight. An overnight position is one that is not closed on the same day, and is still open as of 5pm EST. If the interest rate on the currency that the trader purchased is higher than the… …   Investment dictionary

  • Overnight Position — Trading positions not closed by the end of the trading day and held overnight. For securities trading, overnight positions expose the investor to risk because a number of events can negatively impact a position while the trading floor is closed.… …   Investment dictionary

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