Forex Indicators
FOREX: Who can tell me when to use LIBOR versus LIBID?
Say I'm long on EURUSD and I take the position overnight. Do I receive LIBID rates on EUR and pay LIBOR rates on USD? So I'm assuming that you're saying that the broker doesn't actually pay the interest rates to the customer? They seem to charge rates at 5pm everyday in the form of buys and sells one minute later... looks like I didn't hold a position where I bought pair that allowed for me to get paid there... Wow, still looking for more info. I buy EURUSD. I pay the LIBID on EUR? I collect the LIBOR on USD? The difference in rates is the % multiplier to the balance of my position? Hey, I'm not buying your junk, hawse. I'd sabotage your counter if I knew how...
Public Comments
- You may not automatically receive it by virtue of your forex position. You will have to take care of the investment part of the Euro separately. But, in principle, you may be able to receive LIBID and pay LIBOR. You described the arbitrage process that achieves the parity of rates. Let me explain - you borrow and convert a million dollars to equivalent euros to invest in LIBID based rates. You will pay LIBOR based rates as well, if you borrow outside US (which is lower than US rates). Even if this process doesn't happen from your side, the other market participants may do this to bring the exchange rates to this parity. Hence, you may be able to achieve this by just holding the currency. However, I don't know whether you may be able to do this overnight.
