In trading foreign currency transactions must be settled in 2 business days in the spot Forex market. If you sell $100,000 US dollars on Monday, you must deliver $100,000 US dollars on Wednesday, unless this position is rolled over. A spot Forex position held overnight will be rolled over at 5pm New York time to the next settlement date 2 business days in the future.
Forex postions held overnight can earn or be charged an extra amount of money. Depending on the interest rate differential, you may pay or receive interest fees- rollover fees. If the base currency has a higher interest rate than the counter currency, then you will receive interest and vice versa.
For example if you buy USD/CHF and the interbank interest rates are higher in the US than Switzerland, you will gain a rollover fee. The amount received is calculated by the interest rate differential between the 2 Forex currencies and changes daily with movement of prices. On the other hand if interest rates are higher in Switzerland then you will pay a rollover fee.
