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? 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.