Foreign Currency Exchange Practical Guide: Essential Reading for Yen Investment and Travel

Why is the Japanese Yen Worth Paying Attention To?

When it comes to Taiwanese people’s foreign currency choices, the yen has never been absent. But this is not only due to the travel boom to Japan, more deeply it involves two main aspects: daily consumption and financial allocation.

Practical Application: Travel, Shopping Agents, Studying Abroad

Japan remains a cash-based society; shopping districts in Tokyo, Osaka, and ski resorts in Hokkaido mostly only accept cash (credit card penetration less than 60%). Additionally, the demand for purchasing Japanese cosmetics, clothing, and anime merchandise continues to grow, requiring many consumers to pay directly in yen. Those planning to study or work holiday in Japan also need to plan exchange rates in advance to avoid exchange rate risks from last-minute conversions.

Financial Attribute: Global Safe-Haven Asset

The yen, along with the US dollar and Swiss franc, is one of the three major safe-haven currencies, due to Japan’s long-term economic stability and low debt levels. When global markets fluctuate, capital tends to flow into the yen—during the Russia-Ukraine conflict in 2022, the yen appreciated 8% in a single week, successfully offsetting stock market declines. For Taiwanese investors, holding yen assets is not only for entertainment expenses but also a strategic tool to hedge against Taiwan stock market risks.

The Bank of Japan has maintained an ultra-low interest rate policy (~0.5%) for a long time, making the yen a “funding currency.” Many investors borrow in yen and convert high-yield USD for arbitrage strategies to increase returns, but this also means that when risk scenarios change, closing positions may trigger exchange rate volatility.

Four Exchange Methods Compared in Practice

Many mistakenly believe currency exchange can only be done at banks, but the costs across different channels can vary by 3-5%, significantly affecting final purchasing power. The following analysis is based on actual rates as of December 10, 2025.

Method 1: In-branch Cash Exchange — Traditional but Most Expensive

Bring NT$ cash to a bank or airport counter to exchange for yen notes. This is straightforward but uses the “cash selling rate” (usually 1-2% worse than the spot rate), plus some banks charge fees, making it more costly overall.

Taiwan Bank’s cash selling rate is about 0.2060 TWD/JPY (roughly 4.85 yen per NT$), with some banks adding fixed handling fees. Suitable for travelers unfamiliar with online operations or needing small, urgent exchanges.

Advantages: Safe, reliable, staff assistance on-site, flexible denomination options.
Disadvantages: Less favorable rates, limited by banking hours (9:00-15:30 on weekdays), possible additional fees.

Method 2: Online Currency Exchange + Cash Pickup — A Middle Ground

Use bank app or online banking to convert NT$ to yen at the “spot selling rate” (about 1% better than cash rate), then deposit into a foreign currency account. If cash is needed, go to a bank or foreign currency ATM to withdraw, incurring a withdrawal fee (from NT$100).

Suitable for patient investors—buying in batches during low-rate periods, averaging costs to reduce risk. For example, converting when NT$ to JPY is below 4.80.

Advantages: 24/7 operation, ability to stagger purchases for average cost, relatively better rates.
Disadvantages: Need to open a foreign currency account in advance, withdrawal fees apply.
Target audience: Experienced forex investors or long-term yen holders.

Method 3: Online Currency Settlement + Airport Pickup — Preferred for Travelers

No need for a foreign currency account; fill in the amount, branch, and date online, then complete the transfer and pick up in person with ID and transaction notice. Taiwan Bank and Mega Bank offer this service, with appointment options at Taoyuan Airport branches (Taiwan Bank has 14 locations, 2 open 24 hours).

Taiwan Bank’s “Easy Purchase” online settlement is fee-free (pay NT$10 via TaiwanPay), with about 0.5% better exchange rate. This is the most convenient pre-departure booking method.

Advantages: Better rates, often no fees, designated airport pickup, well-planned.
Disadvantages: Requires 1-3 days’ notice, pickup time limited by bank hours.

Method 4: 24-Hour Foreign Currency ATMs — Most Flexible

Use chip-enabled debit/credit cards at bank foreign currency ATMs to withdraw yen notes, available 24/7, with a small cross-bank fee of NT$5. Limited locations (~200 nationwide), with fixed denominations of 1,000/5,000/10,000 yen.

E.SUN Bank’s foreign currency ATM allows yen withdrawals from NT$ accounts, with a daily limit of NT$150,000 and no exchange fee. Be aware that during peak times (like airports), cash may run out—plan ahead.

Advantages: Instant withdrawal, flexible operation, lowest cross-bank fees.
Disadvantages: Limited locations, fixed denominations, possible cash shortages at peak times.

Cost Comparison Overview

Based on exchanging NT$50,000:

Current Timing for Exchanging Yen

As of December 10, 2025, the NT$ to JPY rate is about 4.85, up approximately 8.7% from 4.46 at the start of the year, providing significant forex gains for Taiwanese investors. In the second half of 2025, forex demand in Taiwan increased by 25%, mainly driven by travel recovery and hedging needs.

Short- to Medium-term Outlook

The US entering a rate-cut cycle supports the yen. Meanwhile, BOJ Governor Ueda Kazuo’s recent hawkish comments have pushed up rate hike expectations to 80%, with a market forecast of a 0.25 basis point increase to 0.75% at the December 19 meeting (a 17-year high), with Japanese government bond yields reaching 1.93%. USD/JPY has fallen from a high of 160 at the start of the year to around 154.58, possibly testing 155 in the short term, but medium to long-term projections suggest it will stay below 150.

Investment Advice

The yen, as a safe-haven asset, is suitable for hedging Taiwan stock market volatility, but short-term arbitrage closing may cause 2-5% fluctuations. It’s recommended to stagger entries to avoid all-in conversions.

Post-Exchange Yen Growth Strategies

After acquiring yen, funds should not remain idle without interest. Here are four suitable options for small-scale beginners:

Yen Fixed Deposit: Stable, open a foreign currency account with E.SUN or Taiwan Bank online, starting from 10,000 yen, with annual interest rates of 1.5-1.8%.

Yen Insurance Policy: Medium-term holding, savings insurance products from Cathay or Fubon Life, with guaranteed interest rates of 2-3%.

Yen ETFs (00675U, 00703): Growth-oriented, Yuanta 00675U tracks yen index, can buy fractional shares via broker apps, suitable for periodic investment.

Forex Swing Trading: Directly trade yen currency pairs (e.g., USD/JPY, EUR/JPY) on forex platforms, characterized by long/short positions, 24-hour trading, low capital requirements.

While yen has strong hedging features, it still faces two-way volatility risks. Besides positive news like BOJ rate hikes, global arbitrage unwinding or geopolitical conflicts (Taiwan Strait/Middle East) may exert pressure. For investing, yen ETFs (management fee ~0.4%/year) can diversify risk; for intra-day or swing trading, forex is a classic way to capture exchange rate movements.

Common Questions and Answers

Q. What is the difference between cash rate and spot rate?

Cash rate (Cash Rate) is the buy/sell rate banks offer for physical cash, convenient for immediate delivery and carrying, but usually 1-2% worse than the spot rate, with higher fees.

Spot rate (Spot Rate) is the exchange rate for transactions settled within two business days (T+2) in the forex market, mainly used for electronic transfers or non-cash settlement. It closely reflects the actual market price but requires T+2 settlement.

Q. How much yen can I get with NT$10,000?

Calculation formula: 【Yen amount = NT$ amount × current rate】

Using Taiwan Bank’s December 10, 2025 cash selling rate of 0.2060 NT$ per yen, NT$10,000 ≈ 48,500 yen. Using the spot rate 0.2061, about 48,700 yen, a difference of roughly 200 yen (about NT$40).

Q. What do I need to bring for in-person exchange?

Taiwanese: ID + passport; foreigners: passport + residence permit. If booked online in advance, also bring transaction notice. Under 20 years old need parental consent and ID; large amounts over NT$100,000 may require source declaration.

Q. Is there a limit for foreign currency ATM withdrawals?

Post-2025 regulations, limits vary by bank:

It’s recommended to split withdrawals or use your own bank card to avoid cross-bank fees (NT$5 per transaction). During peak times, cash may run out—plan ahead.

Note: Comparison for Korean Won Exchange

If interested in exchanging KRW, note that KRW ATMs are scarcer, and counter exchange costs are higher than for yen. Taiwan Bank offers KRW cash exchange, but rates fluctuate more intensely than yen. It’s advisable to use online settlement + withdrawal or withdraw directly at Seoul ATMs.

Summary: Core Principles for Exchanging Yen

The yen is no longer just “travel pocket money,” but an asset with hedging and investment value. Whether preparing for travel or hedging against NT$ depreciation, as long as you follow the principles of “staggered exchange + value-added after exchange,” you can minimize costs and maximize returns.

Beginners are recommended to start with “Taiwan Bank online settlement + airport pickup” or “foreign currency ATM,” then transfer yen into fixed deposits, ETFs, or swing trading based on needs. This not only makes traveling more cost-effective but also adds a layer of protection amid global market fluctuations.