Japanese Yen exchange rate rises, is it now a good time to invest? A comprehensive five-dimensional analysis

In December 2025, the NT dollar to Japanese Yen has risen to 4.85, an increase of approximately 8.7% from 4.46 at the beginning of the year. As travel to Japan and demand for Yen as a safe haven heat up, many investors are starting to ask: When is the most cost-effective time to convert Yen? How should the NT dollar in hand be exchanged to get the best deal?

According to market data, Taiwan’s foreign exchange demand in the second half of the year grew by 25% compared to the same period last year, with tourism recovery and asset allocation sharing the spotlight. But just choosing the right exchange channel can make a difference of about 2,000 NT dollars in costs. Below, through cost breakdowns, market analysis, and practical steps, we guide you to find the most suitable currency exchange plan.

Three Core Reasons to Hold Yen

Basic needs for travel, purchasing, and studying abroad

Tokyo, Osaka, Hokkaido — Japan remains the favorite destination for Taiwanese travelers. Although international card usage has increased, cash transactions still account for over 60%, especially in small shops, restaurants, and hot spring inns, which almost exclusively accept cash. Therefore, whether for vacation spending, anime merchandise purchasing, or long-term study abroad, Yen remains an essential asset.

The risk-hedging attribute cannot be ignored

The Yen has long been one of the world’s three major safe-haven currencies (alongside USD and Swiss Franc), with a negative correlation to Taiwan stocks. During the Russia-Ukraine conflict in 2022, the Yen appreciated by 8% within a week, while the stock market fell by 10%. Investors holding Yen at that time could hedge their risks. For Taiwan asset allocation, a moderate Yen position is considered a defensive strategy.

Arbitrage opportunities from low interest rates

The Bank of Japan maintains an ultra-low interest rate (currently 0.5%), making Yen a preferred financing currency. A common international arbitrage strategy involves borrowing in low-interest Yen, converting to high-interest USD (about 4.0% interest rate differential), and then closing the position when risk increases to lock in profits. Understanding this logic helps predict short-term Yen trends.

Cost Comparison of Four Currency Exchange Channels

Currency exchange may seem simple, but the cost differences can be startling. Based on the latest rates as of December 2025, with 50,000 NT dollars as a benchmark, we conduct practical comparisons.

Bank Counter Exchange: The most traditional but most expensive

Carrying NT cash directly to a bank branch or airport counter to receive Yen cash on the spot. This method is safest, with denominations available (1000/5000/10000 Yen), but banks use the “cash selling rate,” which is about 1-2% worse than the international spot rate.

For example, Taiwan Bank’s cash selling rate on December 10, 2025, was 0.2060 NT$/Yen (1 NT$ = 4.85 Yen). Some banks charge an additional handling fee of 100-200 NT$, resulting in a total loss of about 1,500-2,000 NT$ when exchanging 50,000 NT$. Only recommended for urgent airport needs or those unfamiliar with online operations.

Main bank rates and fees comparison (as of 2025/12/10):

• Taiwan Bank: 0.2060 NT$/Yen, no fee
• Mega Bank: 0.2062 NT$/Yen, no fee
• CTBC Bank: 0.2065 NT$/Yen, no fee
• E.SUN Bank: 0.2067 NT$/Yen, 100 NT$ per transaction
• Fubon Bank: 0.2069 NT$/Yen, 100 NT$ per transaction
• E.SUN Bank: 0.2058 NT$/Yen, 100 NT$ per transaction

Online FX Exchange with Foreign Currency Account: For advanced users

Log into your banking app or online banking, convert NT$ to Yen and deposit into a foreign currency account, using the “spot sell rate” (about 4.87), saving about 1% compared to cash exchange rates. If cash is needed later, withdraw via foreign currency ATM or counter, paying an additional fee around 100 NT$.

Advantages include 24-hour operation, the ability to split into multiple transactions to average costs, and favorable interest rates (current Yen fixed deposit annual rate 1.5-1.8%). Suitable for users with FX investment experience planning to hold Yen long-term. The downside is the need to open a foreign currency account first, which may be slightly complex initially. Exchanging 50,000 NT$ results in a loss of about 500-1,000 NT$.

Online currency exchange + designated branch pickup: The best solution for office workers

No need for a foreign currency account. Simply select currency, amount, pickup branch, and date on the bank’s official website. After completing, bring ID and transaction notification to the branch for cash pickup. Taiwan Bank’s “Easy Purchase” online FX service offers this, with very low handling fees (only 10 NT$ via Taiwan Pay) and a favorable exchange rate discount of 0.5%. The best part is the ability to reserve pickup at 14 locations at Taoyuan Airport (including 2 24-hour branches), making it an ideal pre-departure plan.

The only limitation is the need to book 1-3 days in advance, and pickup times are limited by bank hours (except for 24-hour ATMs). Exchanging 50,000 NT$ results in a loss of about 300-800 NT$.

Foreign currency ATM: Emergency tool for quick cash

Use a chip-enabled debit card at a foreign currency ATM to withdraw Yen instantly. Cross-bank fee is only 5 NT$, no prior reservation needed. E.SUN Bank’s foreign currency ATMs have a daily withdrawal limit equivalent to 150,000 NT$, with no FX fee. 24-hour operation makes it a lifesaver for urgent needs.

However, locations are sparse (about 200 nationwide), denominations are fixed (1000/5000/10000 Yen), and during peak times (like busy airport hours), cash may run out. It’s recommended not to rely on last-minute planning; instead, schedule withdrawals in advance. Exchanging 50,000 NT$ results in a loss of about 800-1,200 NT$.

Withdrawal limits (as of October 2025):

• CTBC Bank: single transaction up to the equivalent of 120,000 NT$, daily limit 120,000 NT$
• Taishin Bank: single transaction up to the equivalent of 150,000 NT$, daily limit 150,000 NT$
• E.SUN Bank: single transaction up to the equivalent of 50,000 NT$, daily limit 150,000 NT$ (including credit card)

Current Yen Exchange Rate and Short-term Outlook

The Yen exchange rate is at a critical juncture. The US has entered a rate-cutting cycle, while the Bank of Japan is on the eve of raising rates: Governor Ueda Kazuo recently made hawkish comments, boosting market expectations of a rate hike to 0.75% at the December 19 meeting (a 30-year high). As a result, USD/JPY has fallen from a high of 160 at the start of the year to 154.58 now, with short-term fluctuations around 155, but medium to long-term forecasts suggest it will stay below 150.

From an investment perspective, Yen remains a safe-haven asset, but short-term risks include unwinding of international arbitrage trades — once risk aversion subsides, large arbitrageurs will buy back Yen simultaneously, potentially causing rapid 2-5% volatility. It’s advisable to stagger entries, avoid all-in conversions, and keep cash reserves for subsequent fluctuations.

In the second half of the year, Taiwan’s FX demand grew by 25%, mainly during the transition between peak and off-peak travel seasons and year-end asset rebalancing, reflecting a market reassessment of Yen.

Advanced Asset Allocation After Converting Yen

If Yen is left idle after conversion, it’s akin to giving up potential gains. Here are four advanced options, each suited to different scenarios:

Yen Fixed Deposit: The lowest risk option. Open a foreign currency account at E.SUN, Taiwan Bank, etc., transfer online. Minimum 10,000 Yen, annual interest rate 1.5-1.8%. Suitable for capital preservation-minded users.

Yen Insurance Policy: Medium-term yield. Cathay, Fubon Life offer Yen-denominated savings insurance with guaranteed interest rates of 2-3%, combining protection and appreciation.

Yen ETFs: Growth-oriented. For example, Yuanta 00675U tracks Yen index, and can be bought as fractional shares via stock apps with an annual management fee of 0.4%. Suitable for investors optimistic about long-term Yen appreciation.

FX Swing Trading: For advanced traders. Trade USD/JPY or other currency pairs directly, utilizing 24-hour markets and long/short strategies to capture volatility. This approach carries higher risk and requires technical analysis and risk management skills.

Quick FAQs

Q: What’s the difference between cash exchange rate and spot rate?
Cash rate applies to physical banknotes and coins, usually 1-2% worse than the spot rate, but you get cash immediately. Spot rate is used for electronic transfers and account settlements (T+2), offering better rates but requiring waiting. In short, cash exchange costs more but provides instant cash.

Q: How much Yen can I get for 10,000 NT$?
Calculation: Yen amount = NT$ amount × current rate. At 4.85, 10,000 NT$ ≈ 48,500 Yen; at spot rate 4.87, ≈ 48,700 Yen. The difference is about 200 Yen (~40 NT$).

Q: What do I need to bring for counter exchange?
Taiwanese: ID card + passport; foreigners: passport + residence permit. If booked online, also bring transaction notification. Under 20 need parental consent and signature; large amounts (>100,000 NT$) may require source of funds declaration.

Q: Are there daily ATM withdrawal limits?
Varies by bank. CTBC: up to 120,000 NT$ equivalent per day; Taishin: up to 150,000 NT$; E.SUN: up to 150,000 NT$ (including credit). Cross-bank limits depend on issuing bank and are usually lower.

Conclusion

Yen has evolved from a “travel pocket money” to an asset with hedging value and small-scale investment potential. Whether for next year’s Japan trip or asset reallocation amid NT$ depreciation pressures, mastering “staggered exchange + don’t leave all in” can minimize costs.

Beginners are advised to start with “Taiwan Bank online FX + airport pickup” or “foreign currency ATM,” then, based on holding period and risk appetite, move Yen into fixed deposits, ETFs, or swing trading. This not only makes travel more cost-effective but also adds a layer of asset protection during global market turbulence. While Yen exchange rates may experience short-term fluctuations, the medium to long-term appreciation potential remains.