I’m confused about terminology, specifically when a cross-currency swap is considered to have “positive” or “negative” basis. In particular, these 2 sections in the curriculum appear (to me) to contradict each other:
Reading 9 Page 98 - The first paragraph refers to a US investor and says when the basis is “negative”… when USD demand is strong relative to Yen, thus borrowing in USD is higher relative to Yen, making lending USD particularly attractive
Practice Problem #5 on page 124 refers also to a US investor…again USD demand stronger relative to Euros, but now the curriculum calls this “positive basis” for ‘lending’ USD.
What am I missing here?