Japanese Yen investment craze is coming! The best hedge against the depreciation of the New Taiwan Dollar

Why Is Now a Good Time to Exchange for Japanese Yen?

As of December 10, 2025, the TWD/JPY exchange rate has risen to 4.85, compared to 4.46 at the beginning of the year, an appreciation of over 8.7%. Meanwhile, the HKD/JPY exchange rate has also experienced fluctuations, reflecting ongoing optimism in the Asian currency markets towards the yen. This is not just a coincidence of peak travel season but also indicates that global investors are reassessing the value of the yen.

The recent hawkish stance of the Bank of Japan is particularly noteworthy. BOJ Governor Ueda Kazuo has signaled a potential rate hike, with market expectations that the December 19 meeting will raise rates by 0.25 basis points to 0.75%, a 30-year high. Japanese government bond yields have also climbed to a 17-year high of 1.93%. These signals are telling investors: the era of low interest rates for the yen is coming to an end.

For Taiwanese people, exchanging for yen is no longer just for shopping in Tokyo or skiing in Hokkaido. Amid the pressure of TWD depreciation, the yen, as one of the world’s three major safe-haven currencies (alongside USD and CHF), is becoming an important asset allocation option.

Investment Potential of the Yen: Why Is It Worth Watching?

Safe-haven attribute attracts capital inflows

Japan’s stable economy and sound government bond structure make the yen highly favored during global market turbulence. For example, during the Russia-Ukraine conflict in 2022, the yen appreciated by 8% in a week, while the stock market fell by 10%. This inverse volatility characteristic makes it an effective hedge for Taiwanese investors against Taiwan stock risks.

Arbitrage opportunities in interest rate differentials

Japan has maintained an ultra-low interest rate policy (just 0.5%), making the yen a “funding currency.” Many international investors borrow low-interest yen to invest in higher-yield assets like USD (with a USD/JPY interest rate differential of up to 4.0%). When market risks increase, these arbitrage trades are quickly unwound, further boosting demand for the yen. For investors, this creates opportunities for swing trading.

Practical needs for living and business

Besides investment, the practicality of the yen should not be underestimated. Whether shopping in Tokyo, vacationing in Okinawa, or purchasing Japanese cosmetics and anime merchandise, cash payments remain mainstream (credit card penetration is only about 60%). Those planning to study or work in Japan can exchange yen in advance to avoid extra costs caused by sudden exchange rate fluctuations.

Five Ways to Exchange for Yen, with Cost Differences Up to 3 Times

Many think bank counter exchange is the only option, but the actual costs can vary dramatically. For example, with 50,000 TWD, choosing different channels can result in a loss difference of up to 1,500 TWD.

Method 1: Bank Counter Cash Exchange (Most Traditional but Most Expensive)

Bring TWD cash to a bank branch or airport counter to exchange for yen notes. Banks use the “cash selling rate,” which is about 1-2% worse than the spot rate. For example, Taiwan Bank’s rate on December 10, 2025, was 0.2060 TWD/JPY (1 TWD = 4.85 JPY).

Some banks also charge fixed handling fees, e.g., E.SUN Bank 100 TWD per transaction, Cathay United Bank 200 TWD. While seemingly small, larger exchange amounts reduce the relative cost.

Estimated Cost: For 50,000 TWD, a loss of 1,500-2,000 TWD, suitable for urgent airport needs or small-scale travelers.

Method 2: Online Currency Conversion into Foreign Currency Account (Flexible but with Withdrawal Fees)

Use bank apps or online banking to convert TWD into JPY and deposit into a foreign currency account, enjoying the “spot sell rate” (about 1% better than cash rate). If cash is needed, withdraw via counter or foreign ATM, incurring a fee starting from 100 TWD.

This method is especially suitable for those experienced in forex trading. You can monitor exchange rates, enter in batches when rates are low (e.g., TWD/JPY below 4.80), to lower average costs. After converting, you can also set up yen fixed deposits with current annual interest rates of about 1.5-1.8%.

Estimated Cost: Loss of 500-1,000 TWD, but batching and fixed deposits can reduce actual costs further.

Method 3: Online Currency Exchange and Airport Pickup (Ideal for Planned Travelers)

No need for a foreign currency account. Fill in the amount, branch, and date online, then bring ID and transaction notice to pick up in person. Taiwan Bank and Mega International Bank offer this service, with appointment options at airport branches.

Taiwan Bank’s “Easy Purchase” online exchange fee is waived (only 10 TWD if paid via Taiwan Pay), with about 0.5% better rates. Very convenient for travelers planning ahead—Taoyuan Airport has 14 Taiwan Bank counters, 2 of which operate 24 hours.

Estimated Cost: Loss of 300-800 TWD, best for planned travelers who want to pick up at the airport.

Method 4: 24-Hour Foreign Currency ATMs (Most Flexible Emergency Option)

Use chip-enabled debit cards at foreign currency ATMs to withdraw yen notes 24/7. Cross-bank withdrawals cost only 5 TWD, deducted directly from TWD account. Fubon Bank’s foreign currency ATMs have a daily limit of 150,000 TWD, with no exchange fee.

The only limitation: about 200 machines nationwide, with fixed denominations of 1,000, 5,000, 10,000 JPY. During peak times, cash may run out. It’s not recommended to wait until the last minute to withdraw.

Estimated Cost: Loss of 800-1,200 TWD, suitable for busy professionals who need quick access.

Method 5: HKD Conversion Route (New Regional Arbitrage Option)

For investors with HKD assets or frequent Hong Kong dealings, HKD/JPY exchange rate fluctuations are also worth watching. As an international free port currency, HKD often offers more competitive rates against JPY than TWD. Some forex platforms or multinational banks provide direct HKD to JPY transfer services, saving one conversion step and potentially lowering costs.

Current Exchange Rate Trends and Investment Advice

USD/JPY has fallen from a high of 160 at the start of the year to 154.58, with a short-term rebound possibly to 155, but medium to long-term forecasts suggest below 150. What does this mean for yen investors?

Gradual entry is essential. While the yen is a safe-haven, it also faces dual-direction volatility. BOJ rate hikes are positive for the yen, but unwinding arbitrage trades or geopolitical tensions (e.g., Taiwan Strait, Middle East) could temporarily weaken it. Investors should avoid all-in exchanges and instead enter in 2-3 batches to average costs.

Market observations indicate that in the second half of 2025, Taiwan’s forex demand will grow by 25%, mainly driven by travel recovery and hedging needs. This reflects increasing recognition of the yen’s multiple values.

Post-Exchange Value-Adding Strategies

After exchanging for yen, don’t let your money sit idle with zero interest. Four options to make yen work for you:

Yen Fixed Deposit is the most stable. E.SUN, Taiwan Bank, and others offer foreign currency accounts, with online deposits starting from 10,000 yen, annual interest of 1.5-1.8%. For conservative investors, this is a zero-risk allocation.

Yen Insurance Policies suit medium-term holders. Cathay, Fubon Life, and others offer yen-denominated savings insurance with guaranteed rates of 2-3%, plus insurance coverage.

Yen ETFs (e.g., Yuanta 00675U, 00703) are suitable for growth-oriented investors. These track yen indices and can be bought in fractional shares via broker apps, ideal for regular investment. Management fees around 0.4% annually, with higher risk and returns than fixed deposits.

Forex Trading (USD/JPY, EUR/JPY) for experienced swing traders. Platforms like Mitrade offer commission-free trading, low spreads, 24-hour markets, and long/short options. A classic way to capture exchange rate movements, but requires risk management skills.

Practical Q&A

Is the difference between cash rate and spot rate really that big?

Yes. Cash rate applies to physical bills and coins, with immediate delivery; spot rate is used for T+2 electronic settlement, closer to international market prices. The 1-2% difference may seem small but can result in significant losses on large amounts.

How much JPY can 10,000 TWD buy?

Using Taiwan Bank’s cash rate of 4.85 on December 10, 2025, about 48,500 JPY. At the spot rate of 4.87, roughly 48,700 JPY, a difference of 200 JPY (about 40 TWD).

What do I need to bring for counter exchange?

ID + passport. If pre-booked online, also bring transaction notice. Under 20s need a parent present. Large amounts (over 100,000 TWD) may require source of funds declaration.

Are there limits on foreign ATM withdrawals?

Yes. Different banks have different limits; for example, Fubon’s card limit is 150,000 TWD per day, others around 50,000-150,000 TWD. After October 2025, some banks restrict third-party digital accounts to 100,000 TWD/day. It’s advisable to split withdrawals or use your own bank card to avoid cross-bank fees.

Summary: Yen Is No Longer Just for Travel

The yen is no longer just “pocket money for trips” but an asset with hedging and investment value. Whether hedging TWD depreciation, offsetting Taiwan stock volatility, or seeking stable returns, the yen can meet diverse needs.

Beginners can start with the simplest “Taiwan Bank online exchange + airport pickup” or “foreign currency ATM,” then gradually upgrade to fixed deposits, ETFs, or swing trading based on their needs. The key is mastering the principles of “batch exchange + not leaving money idle,” minimizing costs and maximizing gains.

This way, you not only enjoy more cost-effective travel but also add a layer of protection in turbulent global markets.