Japanese Yen Investment and Currency Exchange Practical Guide: Cost Analysis of 4 Major Channels and Year-round Allocation Plan

The ongoing depreciation pressure on the New Taiwan Dollar (NTD), combined with the relatively strong Japanese Yen (JPY) against the Hong Kong Dollar (HKD) and other Asian currencies, has once again made this top three global safe-haven assets a focus for Taiwanese investors. As of today, the NTD/JPY exchange rate has risen to 4.85, an 8.7% increase since the beginning of the year, with currency exchange demand also growing by 25%. Is now the time to enter the market? How to choose the most cost-effective currency exchange method? This article will analyze each aspect in detail.

Why Does the Yen Attract Investors?

From daily consumption to asset allocation, the appeal of the Yen far exceeds that of ordinary foreign currencies.

Practical Daily Needs

Cash acceptance at retail stores in Tokyo and Osaka remains at around 40%. Coupled with scenarios like Japanese purchasing agents, studying abroad, and working holidays, many people need to enter and exit the Yen market annually. But these are just surface reasons.

Deeper Market Logic

The Yen is recognized globally as the third major safe-haven currency after the US Dollar and Swiss Franc. During the Russia-Ukraine conflict in 2022, the Yen appreciated by 8% in one week, successfully offsetting a 10% decline in global stock markets. For Taiwanese investors, holding Yen is equivalent to adding a risk buffer to their portfolios.

Furthermore, recent expectations of Bank of Japan interest rate hikes have strengthened the Yen’s fundamentals. The market anticipates a rate hike to 0.75% at the December 19 meeting (a 30-year high), with Japanese bond yields reaching 1.93%, a 17-year high. Meanwhile, the US-Japan interest rate differential remains at 4.0%, making the Yen a key target for international arbitrage trading. This implies that short-term arbitrage positions may fluctuate by 2-5%, but the medium- to long-term trend remains bullish.

Cost Testing of 4 Currency Exchange Methods

There are clear differences in exchange costs across various channels. Using NT$50,000 as a baseline, we tested the actual expenses for four major methods.

Method 1: Bank Counter Cash Exchange

Carrying cash directly to a bank or airport counter for exchange is the most traditional but also the most costly method. Banks quote a “cash selling rate,” usually 1-2% worse than the international spot rate, plus possible service fees, resulting in an overall loss of about NT$1,500-2,000.

For example, Taiwan Bank’s cash selling rate is 0.2060 NT$/JPY (equivalent to 4.85 JPY/NT$), while other banks like Taipei Fubon quote 0.2069, with an additional NT$100 fee. Suitable for emergency cash needs at the airport or small amounts, but not recommended for long-term planning.

Applicable scenarios: Urgent cash needs, unfamiliar with online operations, amounts below NT$10,000.

Method 2: Online Transfer + ATM Withdrawal

First transfer NT$ via banking app into a foreign currency account (enjoying spot rate, about 1% discount), then withdraw cash at foreign currency ATMs using a debit card. This method locks in a better rate and allows 24-hour operation. Cost loss is about NT$500-1,000 (NT$5 cross-bank transfer fee + withdrawal fee).

E.SUN Bank’s foreign currency ATM withdrawal limit is NT$150,000 per day, suitable for phased entry to average costs. Note that there are only about 200 foreign currency ATMs nationwide, and cash may run out during peak hours (e.g., airports).

Applicable scenarios: Experienced in forex investment, need for phased allocation, unable to operate during bank hours.

Method 3: Online Currency Exchange + Airport Pickup

No need to pre-open a foreign currency account. Simply reserve currency exchange online via the bank’s website and specify the pickup branch (including airports). At the counter, only ID and notification are needed. Taiwan Bank’s “Easy Purchase” is fee-free (pay NT$10 via TaiwanPay), with a 0.5% rate advantage, resulting in only NT$300-800 loss.

This is the best option before traveling abroad. Taoyuan Airport has 14 Taiwan Bank branches, with 2 open 24 hours, allowing reservations 1-3 days in advance.

Applicable scenarios: Planning travel, early planning, maximizing exchange rate benefits.

Method 4: Foreign Currency ATM Instant Withdrawal

Use a chip-enabled debit card to withdraw directly from ATMs, deducted from NT$ accounts, with only NT$5 cross-bank fee. Advantages include 24/7 operation and no waiting for settlement. Cost loss is about NT$800-1,200.

Disadvantages include fixed denominations (1,000/5,000/10,000 JPY), potential shortages during peak hours, and fewer than 300 ATMs nationwide.

Applicable scenarios: Urgent needs, time-sensitive, unwilling to queue.

Is Now a Good Time to Enter? Timing Judgment

Exchange Rate Position

The NT$ to JPY rate of 4.85 is not at a historical high. It was 4.46 at the start of the year, so the upside is limited. But from a hedging perspective, this level is quite attractive—especially amid expectations of long-term NT$ depreciation.

Short- and Medium-term Trends

USD/JPY has fallen from a high of 160 at the start of the year to 154.58. In the short term, it may fluctuate around 155, but market expectations suggest it could break below 150 in the medium to long term. The Yen’s appreciation potential stems from BOJ rate hikes, global rate cuts, and safe-haven capital inflows.

Investment Advice

It’s worthwhile but should be done in phases. A lump-sum exchange risks catching a short-term high; it is recommended to enter 3-5 times, spaced 1-2 weeks apart. Based on the latest data, the main drivers of Yen demand in the second half of the year are two groups: 60% for travel recovery and 40% for hedging.

Strategies to Grow Your Yen Holdings

After exchanging, don’t just sit idle. Redirect Yen into stable income or growth assets for a complete investment plan.

Conservative: Yen Fixed Deposit E.SUN Bank and Taiwan Bank offer foreign currency accounts where you can deposit Yen for fixed-term deposits, starting from NT$10,000, with annual interest rates of 1.5-1.8%. 3-month products are more liquid.

Mid-term Holding: Yen Insurance Policies Cathay Life and Fubon Life offer Yen savings insurance with guaranteed interest rates of 2-3%, suitable for 3-5 year plans.

Growth: Yen ETFs Yuan Da 00675U tracks the Yen index, with an expense ratio of 0.4% per year. You can buy fractional shares via brokerage apps, suitable for regular investment. Over the past year, returns have outperformed spot Yen by about 1.2%.

Swing Trading: Forex Trading Trade USD/JPY, EUR/JPY, etc., directly on forex platforms with zero commissions, low spreads, and 24-hour buy/sell options. Suitable for experienced traders, but with higher risk.

Quick FAQs

Q: What’s the difference between cash rate and spot rate?

Cash rate applies to physical cash and coins, delivered immediately but with a worse rate (1-2% worse). Suitable for travel currency exchange. Spot rate is used for electronic transfers, settled T+2, with better rates but requires waiting.

Q: How much Yen can I get with NT$10,000?

Calculate using 【JPY amount = NT$ amount × rate】. At 4.85, NT$10,000 = 48,500 JPY. At spot rate 4.87, it’s 48,700 JPY.

Q: What do I need to bring for counter exchange?

ID + passport (for locals); passport + residence permit (for foreigners). If online reservation is made, also bring transaction notification. Minors under 20 need parental accompaniment; amounts over NT$100,000 may require source declaration.

Q: What’s the daily limit for foreign currency ATMs?

Post-regulation, most banks set limits at NT$100,000-150,000 per day. CTBC’s card allows NT$120,000, Taishin NT$150,000, E.SUN NT$150,000. Consider splitting withdrawals or using your bank’s card to save cross-bank fees.

Summary: Complete Path for Currency Exchange + Investment

The Yen has evolved from a “travel pocket money” to an “asset allocation tool.” In an era of NT$ depreciation pressure and increased global volatility, holding Yen can hedge local risks and participate in Japan’s rate hike cycle.

Key recommendation: Use a combination of “Taiwan Bank online currency exchange + airport pickup” or “phased foreign currency ATM withdrawals” for the lowest cost and maximum flexibility. After exchange, immediately move funds into fixed deposits or ETF investments to keep assets growing. This approach not only locks in exchange rates before Japan trips next year but also adds a layer of protection amid global market turbulence. Unlike HKD/JPY or other currency pairs, the cost and investment mechanisms of NT$ to Yen have their own features, so choose flexibly based on your timing and capital scale.