Cross Currency Roll Over contacts are contracts to cover overseas leg of long term foreign exchange liabilities or assets. The cover is initially obtained for six months & later extended for further period of 6 months & so on.
Roll Over charge or benefit depends on forward premium or discount, which in turn, is a function of interest rate differential between US dollar & the other currency. There is no risk of currency appreciation or depreciation in the overseas leg:
Roll over for a maturity period exceeding 6 months is not possible because in the inter-bank market, quotations beyond 6 months are not available.
Under the Roll over contracts the basic rate of exchange is fixed but loss or gain arises at the time e of each Roll over depending upon the market conditions.