Like a stock dividend, every currency pair has an interest rate associated with it. Depending on the currency pair you trade, you will pay or earn interest at the end of the trading day at 5:00pm EST. To earn interest, a you must buy a currency with a higher interest rate than the one they are selling.

Take USD/JPY in Oct 2006 for example. At the time the US Dollar earned 5.25% and the Japanese Yen 0.25% interest. A trader that buys this pair would make the differential of 5% on the year by simply holding the position.

Rollover Interest Mechanics in FX
The Spot Forex market accounts for interest on a daily basis. At the end of each trading day at 5:00pm EST, traders will see the rollover charge or income posted.

Wednesday & Holiday Rollover - Each typical trading day posts only one day's worth of interest. But since there are only five days in a trading week, Wednesday rollover typically accounts for the three days of the weekend. Also if any holiday closes markets, a day before hand will account for the missed day of rollover interest.

Why at 5:00pm EST, and why the two day rollover period? The rollover time is set at 5:00pm EST simply due to convention amount banks in the currency market.

Also Wednesday is two days before the weekend; since banks have a two day rollover schedule (where any position owed is due for payment in two days) Wednesday typically has the weekend's worth of rollover.

Banks settle rollover interest with each other, thus long ago they established these conventions in which the market operates.

Rollover is one of the most attractive aspects of the currency market and many traders will place positions solely with the intent of earning daily interest ( carry trade ).