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Kinkin Osaka Ginko is a Japanese regional bank, focused on retail and mid-sized commercial banking for domestic firms. Kinkin Osaka Ginkos main source of funding is retail deposits denominated in Japanese Yen. A commercial client of the bank, Kirin Beverages, approaches the bank to borrow $20 million USD for one year, to fund a small acquisition in the United States. Kinkin Osaka Ginkos treasurer, Yuji Tanaka, wants to raise the USD to meet his client request. Unfortunately, the banks charter prohibits Tanaka from directly taking foreign exchange risk. Tanka believes his bank can raise the required USD, without taking FX risk, via so-called JPY/USD cross currency basis market. Tanka notes the following market data:

Instrument	Live Quote
JPY/USD 1y basis swap	LIbor -30bp
1 Year USD Libor	2.65%
1Year JPY LIbor	.75%
USD/JPY FX rate - spot	108.37
US/JPY FX rate 1 year forward	110.43

. To raise the required USD funding via the cross-currency basis swap market, Tanaka will

1. Receive the JPY/USD 1y basis swap
2. Pay the JPY/USD 1y basis swap
3. Sell Yen and buy USD in the foreign exchange market