New Investment Option for Japanese Yen: Seize Exchange Rate Opportunities and Foreign Currency Fixed Deposit Strategies

The yen market in 2025 is worth paying attention to. Currently, the TWD/JPY exchange rate has reached 4.85, up nearly 9% from 4.46 at the beginning of the year. This presents both opportunities and risks for Taiwanese planning to travel to Japan or allocate foreign currency assets. But before exchanging currency, you need to clarify three core questions: Is now a good time to exchange? Which method is most economical? How to make your funds work effectively after the exchange?

Why is it worth exchanging for JPY? Not just for travel currency

When it comes to foreign currency exchange, the yen is often the first choice. The logic behind this goes far beyond travel expenses.

From daily application perspective, retail merchants in Tokyo and Osaka still accept cash widely (credit card penetration is only 60%), and purchasing from Japanese online shops or auctions requires direct payment in yen. Those planning to study abroad or work part-time also prefer to exchange in advance to avoid additional costs from exchange rate fluctuations.

More importantly, it has financial value. The yen is one of the world’s three major safe-haven currencies alongside the US dollar and Swiss franc. This means that during global market turmoil (such as the Russia-Ukraine conflict in 2022), funds tend to flow into the yen for refuge—at that time, the yen appreciated by 8% in a single week, effectively buffering a 10% decline in the stock market. For Taiwanese investors, moderate allocation of yen is not only a consumption option but also a hedge against Taiwan stock market risks.

Additionally, the Bank of Japan has maintained ultra-low interest rates (only 0.5%) for a long time, making the yen a “funding currency.” Savvy arbitrage traders borrow low-interest yen, convert to higher-yield USD investments (the USD/JPY interest rate differential is about 4.0%), and when risks rise, close positions for profit. This trading liquidity contains opportunities for exchange rate fluctuations.

Is it advantageous to exchange for yen now? Market timing analysis

Based on data, the timing is quite good, but a phased approach is recommended.

The rate of 4.85 on December 10, 2025, has appreciated by 8.7% compared to the beginning of the year, generating significant exchange gains. Especially under the backdrop of the TWD facing depreciation pressure, the defensive value of holding yen is clear. According to statistics, Taiwan’s foreign exchange demand increased by 25% in the second half of the year, mainly driven by travel recovery and increased hedging needs.

However, short-term volatility risks should also be considered. The US is entering a rate-cut cycle, while the Bank of Japan is on the verge of raising interest rates—recent hawkish comments from Governor Ueda have pushed market expectations for a rate hike on December 19 to 80%, with an estimated increase of 0.25 to 0.75 bps (a 30-year high), and Japanese government bond yields have hit a 17-year high of 1.93%. USD/JPY has fallen from a high of 160 at the start of the year to 154.58 now, with a short-term test of 155 possible, but the medium to long-term trend is forecasted to stay below 150.

Investor advice: Enter gradually rather than all at once. When the TWD/JPY rate drops below 4.80, consider adding moderately; when approaching 4.90, plan to exit. This approach helps average costs and flexibly respond to exchange rate fluctuations.

Cost and efficiency comparison of five exchange channels

Many mistakenly think exchanging yen only involves going to the bank, but the difference in exchange rates alone can cost thousands of NT dollars. Here’s a detailed analysis:

Method 1: In-person cash exchange—traditional but most costly

Carry TWD cash to a bank branch or airport counter to exchange for yen cash. This method uses the “cash selling rate,” which is usually 1-2% worse than the spot rate.

For example, as of 9:18 AM on December 10, 2025, Taiwan Bank’s cash selling rate is about 0.2060 TWD per yen (roughly 4.85 yen per TWD). Some banks charge fixed handling fees. Exchanging 50,000 TWD would cost approximately 1,500-2,000 NT dollars in total.

Suitable for: Those unfamiliar with online operations, needing small amounts for immediate use (e.g., at the airport).

Major banks’ rates and fees on December 10, 2025 (based on real-time official websites):

Method 2: Online currency exchange + ATM cash withdrawal—flexible and cost-effective

Use online banking or app to convert TWD into yen and deposit into a foreign currency account, using the “spot sell rate” (about 1% better than cash selling rate). If cash is needed, withdraw via foreign currency ATMs or in-person, incurring additional fees (around NT$100+).

This method allows for phased purchases to average costs, suitable for observing exchange trends and entering at low points. Exchanging 50,000 TWD might cost around 500-1,000 NT dollars in total.

Suitable for: Those experienced with forex, using foreign currency accounts, and considering yen fixed deposits (current annual interest rate around 1.5-1.8%).

Method 3: Online currency settlement + airport pickup—best for planners

No need to pre-open a foreign currency account. Fill in currency, amount, branch, and date on the bank’s website, complete remittance, then bring ID and transaction notice to pick up in person. Taiwan Bank and Mega Bank offer this service, with options to reserve airport branch pickup.

Taiwan Bank’s “Easy Purchase” online settlement usually has no handling fee (only NT$10 if paid via Taiwan Pay), with about 0.5% exchange rate advantage. Taoyuan Airport has 14 Taiwan Bank outlets (including 2 24-hour branches), ideal for pre-departure planning. Exchanging 50,000 TWD might cost around 300-800 NT dollars.

Suitable for: Travelers with a plan who want to pick up cash directly at the airport.

Method 4: Foreign currency ATM—24/7 instant withdrawal

Use chip-enabled bank cards at foreign currency ATMs to withdraw yen cash, supporting 24-hour operation and interbank transactions (only NT$5 fee for deduction from TWD account). Fubon Bank’s foreign currency ATMs allow withdrawal of yen with a daily limit of NT$150,000, no exchange fee.

However, the number of foreign currency ATMs is limited (about 200 nationwide), mainly supporting mainstream currencies. During peak times (like at airports), cash may run out. Plan ahead to avoid missing out. Exchanging 50,000 TWD might cost around 800-1,200 NT dollars.

Suitable for: Those with no time to visit banks or needing urgent cash.

Method 5: Foreign currency fixed deposit—convert liquidity into yield

After exchanging for yen, instead of letting funds idle, utilize foreign currency fixed deposits to generate stable returns. Banks like E.SUN and Taiwan Bank offer foreign currency deposit services, with minimums starting at 10,000 yen and annual interest rates of 1.5-1.8%. Compared to TWD fixed deposits (usually 0.5-1%), yen deposits have a clear advantage.

Simple steps: open a foreign currency account online → convert to yen → set up fixed deposit → accrue interest automatically. This is not just for travel expenses but also a first step in asset allocation.

Four common yen asset allocation methods

After exchanging yen, if you don’t want your money to sit idle with zero interest, consider the following allocations, especially suitable for small-scale beginners:

1. Yen fixed deposit: conservative
Interest rate 1.5-1.8%, minimum 10,000 yen. Open an account with E.SUN or Taiwan Bank online, low risk, stable returns.

2. Yen insurance policy: medium-term hold
Cathay or Fubon savings insurance in USD/JPY, guaranteed interest 2-3%, suitable for 3-5 year holding.

3. Yen ETF: growth-oriented
Like Yuanta 00675U, tracking the yen index, can be bought as fractional shares via broker app, with an annual management fee of 0.4%. Suitable for long-term bullish outlook on yen appreciation.

4. Yen forex trading: swing trading
Trade USD/JPY, EUR/JPY directly on forex platforms, with two-way trading 24/7, starting with small capital. Suitable for investors with risk tolerance.

While yen has hedging features, it also faces two-way volatility risks. Rate hikes are supportive, but global arbitrage unwinding or geopolitical conflicts (Taiwan Strait, Middle East) could push prices down. Beginners should start with fixed deposits, then gradually explore ETFs or forex trading as experience grows.

Comprehensive comparison of five exchange methods

Quick FAQs

Q: How much is the difference between cash rate and spot rate?
Cash rate (for physical cash) is usually 1-2% worse than the spot rate, plus handling fees, making it more expensive. Spot rate (for electronic transfer) is more favorable but takes T+2 settlement.

Q: How many yen can I get with NT$10,000?
Using Taiwan Bank’s cash selling rate of 4.85 on December 10, 2025, NT$10,000 exchanges for about 48,500 yen. Using the spot rate (~4.87), about 48,700 yen, roughly a 200 yen difference.

Q: What do I need to bring for in-person exchange?
ID card + passport for locals; passport + residence permit for foreigners. If booked online, also bring transaction notice. Under 20 needs parent’s accompaniment; large exchanges over NT$100,000 may require source of funds declaration.

Q: What is the limit for foreign currency ATM withdrawals?

Post-2025 regulations, daily limits are often reduced to NT$100,000-150,000. Consider splitting withdrawals or using your own bank card to avoid interbank fees.

Summary: Minimize costs, maximize returns with smart exchange strategies

Yen is no longer just travel “pocket money” but also an asset with hedging and investment value. Follow these two principles to minimize exchange costs:

First: Phased entry. When TWD/JPY drops below 4.80, add moderately; near 4.90, plan to exit. This balances costs and responds flexibly to short-term fluctuations.

Second: Don’t let your funds sit idle after exchange. Use foreign currency fixed deposits—minimum 10,000 yen, annual interest 1.5-1.8%—to keep earning. Or, based on risk appetite, consider ETF dollar-cost averaging or forex swing trading.

For beginners, start with the simplest options like “Taiwan Bank online settlement + airport pickup” or “foreign currency ATM,” then transfer yen into fixed deposits, ETFs, or try forex trading as experience grows. This way, you can enjoy more cost-effective international travel and asset protection amid global market volatility.