The New Era of Yen Investment: 4 Major Exchange Strategies and Hedging Layouts

Why is the Japanese Yen Worth Paying Attention To? From Travel to Asset Allocation

By 2025, the TWD to JPY exchange rate has reached 4.85, which not only reflects changes in travel costs to Japan but also marks a turning point where the yen shifts from “travel pocket money” to a “hedging asset.” Compared to the exchange rate of 4.46 at the beginning of the year, the yen has appreciated by 8.7%, generating significant exchange gains.

There are three main reasons why investors should pay attention to the yen. First, it is one of the world’s three major safe-haven currencies (the other two are USD and CHF). During market turbulence, funds tend to flow into the yen. For example, during the Russia-Ukraine conflict in 2022, the yen appreciated by 8% within a week, effectively buffering a 10% decline in the stock market. For Taiwanese investors, exchanging to yen is not just for travel but also for hedging against Taiwan stock market volatility.

Second, Japan’s ultra-low interest rate policy (only 0.5%) makes the yen a “funding currency.” Many institutional investors borrow low-interest yen to buy higher-yielding USD (the USD/JPY interest rate differential reaches up to 4%), creating arbitrage opportunities. Lastly, in the second half of the year, Taiwan’s foreign exchange demand increased by 25%, mainly driven by travel recovery and rising hedging needs, reflecting a new market perception of the yen.

Is it Cost-Effective to Exchange Yen Now? The Battle Between Exchange Rates and Central Bank Policies

Exchange Rate Trend Analysis

As of December 10, 2025, the TWD to JPY rate remains around 4.85. USD/JPY(USD/JPY) has fallen from a high of 160 at the start of the year to 154.58. In the short term, it may rebound to 155, but medium to long-term forecasts suggest it will stay below 150. This range is relatively low for small-scale investments or travel budgets.

Central Bank Policy Drivers

Bank of Japan Governor Ueda Kazuo recently made hawkish comments, pushing market expectations of rate hikes to 80%. The December 19 meeting is expected to raise rates by 0.25 basis points to 0.75% (a 30-year high). Japanese government bond yields have risen to a 17-year high of 1.93%. After the US entered a rate-cutting cycle, the yen is supported from both ends—expectations of rate hikes in Japan and the relative interest rate advantage.

Investment Recommendations

Exchanging to yen now is worth considering, but must be done in stages. In the short term, the yen may face arbitrage closing risks, with volatility estimated at 2-5%. It is recommended to split the exchange into 3-4 transactions, increasing the amount when the TWD/JPY rate drops below 4.80, to avoid the risks of a one-time full exchange.

NT$50,000 to Yen: 4 Major Cost Comparison Methods

While exchanging yen seems straightforward, cost differences can reach NT$1,500-2,000. Here, we break down four methods.

Method 1: Over-the-counter cash exchange (traditional but inefficient)

Carry NT$ cash to a bank or airport counter to exchange for yen cash. This is the simplest method but uses the “cash selling rate,” which is about 1-2% worse than the spot rate, making it the most expensive.

For example, Taiwan Bank’s cash selling rate is 0.2060 TWD/JPY (i.e., NT$1 exchanges for 4.85 yen). Some banks charge an additional handling fee of NT$100-200. Mega Bank, CTBC, and First Bank have similar rates (0.2062-0.2065), while Taipei Fubon Bank is slightly worse (0.2069).

Estimated loss for NT$50,000: NT$1,500-2,000

• Pros: Safe, full denominations, assistance from staff
• Cons: Worst exchange rate, limited business hours (9:00-15:30 on weekdays)
• Suitable for: Urgent airport needs, unfamiliar with online operations

Method 2: Online currency exchange + counter/ATM withdrawal (advanced investors)

Use online banking 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 at counters or foreign currency ATMs, incurring additional exchange spread and handling fees (from NT$100).

After currency exchange via E.SUN Bank app, withdrawing yen cash incurs a fee equal to the difference between spot and cash rates, minimum NT$100. This method is suitable for observing rate trends and entering in stages at low points. Additionally, yen deposits in foreign currency accounts earn annual interest rates of 1.5-1.8%, providing a long-term value growth channel.

Estimated loss for NT$50,000: NT$500-1,000

• Pros: 24/7 operation, averaging costs over stages, better rates, can invest in fixed deposits
• Cons: Need to open foreign currency accounts, withdrawal fees NT$5-100
• Suitable for: Experienced forex traders, long-term holders

Method 3: Online currency exchange + airport pickup (ideal for travel planning)

No need for a foreign currency account. Fill in currency, amount, pickup branch, and date on the bank’s website. Taiwan Bank and Mega Bank offer this service, with appointment options at airport branches. Taiwan Bank’s “Easy Purchase” online exchange has no handling fee (pay NT$10 via TaiwanPay), with about 0.5% better rates. Taoyuan Airport has 14 Taiwan Bank counters (2 open 24 hours), making it the best choice before departure.

Estimated loss for NT$50,000: NT$300-800

• Pros: Better rates, often no handling fee, direct airport pickup
• Cons: Need to book 1-3 days in advance, branch appointments cannot be changed
• Suitable for: Planned travel, those wanting to pick up at the airport

Method 4: Foreign currency ATM withdrawal (emergency use)

Use chip-enabled debit/credit cards at foreign currency ATMs to withdraw yen cash, available 24 hours. E.SUN Bank’s foreign currency ATMs allow NT$ account holders to withdraw yen with a daily limit of NT$150,000, no exchange fee (only NT$5 interbank fee). About 200 ATMs nationwide support this, but denominations are fixed (1,000/5,000/10,000 yen).

Estimated loss for NT$50,000: NT$800-1,200

• Pros: 24/7 instant access, low interbank fees, convenient deduction from NT$ account
• Cons: Limited locations, fixed denominations, cash shortages during peak times
• Suitable for: Urgent, temporary cash needs without visiting counters

Essential Checklist and Quota Rules for Yen Exchange

Documents required for counter transactions

Taiwanese nationals need to bring ID + passport; foreigners need passport + residence permit. If pre-booked online, also bring transaction notification. Minors under 20 require parental accompaniment and consent. For large exchanges (over NT$100,000), declare source of funds.

Foreign currency ATM withdrawal limits (latest 2025 regulations)

CTBC Bank: NT$120,000 per transaction and per day; Taishin Bank: NT$150,000 per transaction and per day; E.SUN Bank: NT$50,000 per transaction, NT$150,000 per day. Digital accounts (category 3) have lower limits (around NT$100,000/day) due to anti-fraud measures. It is recommended to diversify withdrawals or use your own bank card to avoid NT$5 interbank fees.

After Exchanging Yen: 4 Major Value-Adding Options

Once you have yen, just holding it is a missed opportunity for appreciation. The following four options are suitable for small-scale beginners:

1. Yen Fixed Deposit (conservative) Open online accounts with E.SUN or Taiwan Bank, starting from NT$10,000 yen, with annual interest rates of 1.5-1.8%. Lowest risk, suitable for idle funds after short-term travel.

2. Yen Insurance Policy (medium-term holding) Cathay and Fubon Life offer yen savings insurance with guaranteed interest rates of 2-3%, locking in medium-term returns. Suitable for 1-3 years of asset allocation.

3. Yen ETFs (growth-oriented) Yuan Da 00675U, 00703 tracking yen indices, can be bought as fractional shares via broker apps, suitable for dollar-cost averaging. Management fee 0.4% annually, balancing risk and return.

4. Forex Trading in Yen (swing trading) Trade USD/JPY(USD/JPY) or EUR/JPY(EUR/JPY) directly via forex platforms. Advantages include two-way trading, 24-hour operation, and small capital requirements, but requires risk management skills.

Yen vs AUD vs HKD: Asia-Pacific Currency Allocation Considerations

Many investors wonder: besides yen, are there other Asia-Pacific currencies worth watching?

Yen’s advantages include strong hedging properties, central bank support, and rising interest rate expectations. The downside is that long-term rates are still lower than AUD.

AUD has higher interest rates (reserve rate 5.35%) but faces higher commodity risks, is highly correlated with China’s economy, and is volatile. Hong Kong dollar is relatively stable but pegged to USD, lacking independent policy space, with limited long-term appreciation potential.

From a risk-adjusted return perspective, yen remains the best allocation, especially as global recession risks increase. A core allocation of 50-60% yen, 30-40% AUD, and 10-20% HKD is recommended to balance defense and growth.

Summary: Two Golden Rules for Yen Investment

The yen has upgraded from a travel sidekick to an investment main character. Whether for travel or asset hedging, following the “staged exchange + don’t leave it lying” principles can minimize costs and maximize returns.

Beginners are advised to start with “Taiwan Bank online exchange + airport pickup” or “foreign currency ATM,” then transfer yen into fixed deposits, ETFs, or even try forex swing trading based on needs. This way, you not only enjoy cost-effective travel but also add a layer of protection during market volatility. As the TWD continues to depreciate, the hedging value of the yen will become increasingly prominent.