Hi all,
I’ve been short AUS/USD for a while and the negative swap is shockingly huge.
I’m with FXPRO and their website states ‘AUS/USD Swap value in points (Short): -6.45’. What does this mean?
Is it the annual equivalent % rate you pay?
Is it the USD value per day, per standard lot you have sold?
I just don’t know. If anyone could help me I’ll be very grateful.
Thanks.
Bob
This is because interest rates down under are higher than in the U.S. If the swap rate quoted by your broker is -6.45, then you will be charged .0645 for each 1,000 you are short the pair per day. Keep in mind that this INCLUDES weekends and holidays. But, most brokers apply the fees on certain days at certain times which can be a little confusing.
For example, I shorted AUD/USD on the 14th of December. I was charged:
15th = 1 day
16th = 1 day
17th = 3 days
18th = 1 day
19th = 1 day
20th = 0 days
21st = 0 days
22nd = 1 day
If my stop is not triggered I will be charged:
23rd = 5 days
24th = 0 days
25th = 0 days
26th = 1 day
In addition to the changes in the number of days charged per calendar day, rates change over time. Take a look at these factors and you may see why the number is what it is.
Currently, the Kiwi and the Aussie have some of the highest swap costs to hold short among the 20 currencies I am in.
Thanks for your comprehensive response Arbitrager on Acid.
Just to clarify with a concrete example, if I had a USD$ denominated account and sold 1000 AUD$ against the USD$, would I be paying the USD$ equivalent of 6.45 Australian cents ($0.0645 AUD) per day for the above swap rate?
Why is the swap rate expressed per 1000 of the base currency? Just convention perhaps.
As far as I am aware, if you look at a quote from any broker (perhaps some are different) the “swap rate” or “roll” or “rollover” is a quote for THAT SESSION. And it is quoted in the currency in which the account is denominated (in your case is it pounds?). So if your quote says -6.45 for a given day, you should be charged 6.45 cents per $1,000 lot you hold short THAT NIGHT.
Check it: on the 24th and 25th my broker is charging zero days as I mentioned above. As a result, my quote screen looks like this:
See all the ZEROS? On the 23rd the numbers were higher than usual, it was a 5 day rollover session because of the holiday. But today and tomorrow my screen will have all ZEROS for the roll figures of the quotes.
Swap rates are expressed in terms of $1000 lots if you have a micro account (an account that allows you to take $1000 lots). If you have a standard account, it will be expressed in terms of $100,000 lots.
Also, the actual fees are rounded up, don’t forget that. If you are trading 1 micro lot and the rate is 6.45, you will be charged -7.00.
value in points/365* lot of the position.