Does the company trade a 1-month swap at 4.44 or 4.34?
Swap Points Paid
The trade is on the offer side of the swap because the company is buying the base currency from the market maker on the far date. The initial swap on the spot date is at at mid-spot (1.6823). This FX swap will result in the company giving GBP to the bank for a month and the bank giving the company the equivalent amount of USD for the month. For the month, the company has the use of USD and the bank has the use of GBP. As the bank holds the higher yielding currency, it must compensate the company for the interest differential. It does this by paying the company 4.34 points in the swap.
The details of the swap from the company's perspective are shown below: