Yen fixed deposit interest is attractive, but choosing the right currency exchange method first is more cost-effective

This December, the NT dollar to Japanese Yen has reached 4.85, an 8.7% increase from the beginning of the year at 4.46. Many people hearing this news immediately think about exchanging yen for investment or fixed deposits. But the question is: what’s the most cost-effective way to exchange? Go directly to the bank counter? Or use a mobile app online? Choosing the wrong method could cost you an extra 2,000+ NT dollars, which is equivalent to several months of fixed deposit interest income.

First, ask yourself: Why are you exchanging yen?

Before deciding on currency exchange, clarify your needs. Yen is not just for travel pocket money; it is also one of the world’s three major safe-haven currencies (USD, Swiss Franc, Yen). In the second half of the year, Taiwan’s currency exchange demand grew by 25%, driven by three factors: travel recovery, asset hedging, and attractive yen fixed deposit interest rates.

Travel and daily needs: Visiting Tokyo, Osaka, Hokkaido—most stores still only accept cash, with credit card penetration at only 60%. Purchasing agents, online shopping in Japan, studying abroad, and part-time work also require cash or remittance.

Financial hedging and arbitrage: The Bank of Japan recently shifted to a hawkish stance, with Governor Ueda Kazuo boosting market expectations to 80%, expecting a 0.25bps rate hike on December 19 to 0.75% (a 30-year high), with Japanese bond yields reaching a 17-year high of 1.93%. Amid a slowdown in global central bank rate hikes, the yen has been relatively resilient. Meanwhile, the US-Japan interest rate differential still stands at about 4.0%, attracting arbitrage traders. More importantly, yen fixed deposit interest rates are now 1.5-1.8% annually, which is quite attractive for Taiwanese.

4 currency exchange channels with vastly different costs

Exchanging yen seems simple, but the exchange rates offered by different banks and methods can cause you to pay an extra 1500-2000 NT dollars (based on 50,000 NT). Below, ranked from most expensive to least:

Most expensive: Counter cash exchange (loss of 1500-2000 NT)

Carrying NT dollars to a bank or airport counter to buy cash is the most traditional and costly method. Banks sell at a “cash selling rate,” which is about 1-2% worse than the international spot rate. For example, Taiwan Bank as of December 10, 2025, offers a cash selling rate of about 0.2060 NT$/Yen (4.85 Yen/NT$), while the real-time international rate might be 4.87-4.88.

Some banks also charge handling fees, e.g., E.SUN and Yongfeng add 100 NT, Cathay United adds 200 NT. So with 50,000 NT:

• Taiwan Bank cash exchange: 50,000 ÷ 4.85 ≈ 103,100 Yen, no handling fee
• E.SUN cash exchange: 50,000 ÷ 4.84 ≈ 103,300 Yen + 100 NT handling fee
• Cathay United cash exchange: 50,000 ÷ 4.83 ≈ 103,500 Yen + 200 NT handling fee

The difference adds up to a loss of 1500-2000 NT. The advantage is safety, full denominations, and immediate cash on hand—suitable for those unfamiliar with online operations or urgent needs (like last-minute airport cash).

Moderate: Online exchange + counter or ATM cash withdrawal (loss of 500-1000 NT)

This is the “smart choice” most overlook. The process: use bank app or online banking to convert NT to Yen into a foreign currency account (enjoying the “spot sell rate,” about 1% discount), then withdraw cash at counter or foreign currency ATM.

For example, after currency exchange via E.SUN app, to withdraw cash, you only pay the “difference between spot and cash rate” as a handling fee (minimum 100 NT). So with 50,000 NT:

• Online convert to Yen account: 50,000 ÷ 4.87 ≈ 102,700 Yen
• At counter ATM withdrawal: +100 NT handling fee
• Actual amount received: about 102,700 Yen, total loss around 500-800 NT

This method suits those with foreign currency accounts, allowing for staggered purchases, averaging costs, and even earning yen fixed deposit interest. The downside: you need to open a foreign currency account first, and cross-bank withdrawals cost 5-100 NT.

Cheapest: Online currency exchange + airport pickup (loss of 300-800 NT)

Especially cost-effective for frequent travelers. Taiwan Bank’s “Easy Purchase” online currency exchange service has no handling fee (pay via Taiwan Pay, only 10 NT), with about 0.5% favorable exchange rate, and allows pickup at airport or designated branch. Taoyuan Airport has 14 Taiwan Bank counters (2 open 24 hours), very convenient.

Process: fill in currency, amount, and pickup branch online in the morning, then go with ID and transaction notice to pick up cash in the afternoon or next day. Flexible reservation—can book any day before your trip next year. With 50,000 NT:

• Online exchange rate: 50,000 ÷ 4.88 ≈ 102,500 Yen
• Handling fee: 10 NT (Taiwan Pay discount)
• Actual received: about 102,500 Yen, total loss around 300-500 NT

Disadvantage: need to book 1-3 days in advance; branch pickups cannot be changed last minute; pickup only during bank hours. Suitable for planned travelers who want to pick up at the airport.

Most flexible: 24-hour foreign currency ATM withdrawal (loss of 800-1200 NT)

Use chip-enabled financial cards at foreign currency ATMs to withdraw Yen cash 24/7, with only 5 NT cross-bank fee. E.SUN’s foreign currency ATMs allow withdrawal from NT dollar accounts, with a daily limit of 150,000 NT, no currency exchange fee.

However, only about 200 such ATMs nationwide, supporting major currencies (Yen, USD, Euro, etc.), with fixed denominations of 1000/5000/10000 Yen. During peak times (airports, large department stores), cash may run out. With 50,000 NT:

• ATM rate: 50,000 ÷ 4.86 ≈ 102,900 Yen
• Cross-bank fee: 5 NT
• Actual received: about 102,900 Yen, total loss around 800-1000 NT

Suitable for busy workers with no time to visit banks or for last-minute withdrawals. Note: by the end of 2025, Japan ATM withdrawal services will require international cards (Mastercard/Cirrus).

Is it a good time to exchange yen at 4.85?

This rate is actually quite good. At the start of the year, it was 4.46, appreciating 8.7%. For Taiwanese investors, this is a significant currency gain, especially under NT dollar depreciation pressure. But short-term volatility exists: USD/JPY dropped from a high of 160 at the start of the year to around 154.58 now; it may rebound to 155 short-term, but medium to long-term forecasts are below 150.

Recommend dollar-cost averaging. If for investment, yen as a safe-haven currency is suitable for hedging Taiwan stock market volatility, but short-term arbitrage closing could cause 2-5% fluctuations. Do not exchange all at once; instead, do it in 3-5 installments to lower the average cost.

Especially if you plan to use yen for yen fixed deposits (annual rate 1.5-1.8%), staggered entry allows each batch to earn fixed deposit interest during its period.

How to make yen appreciate after exchange?

Don’t let your yen just sit idle without income. Here are four allocation options, each with pros and cons:

1. Yen fixed deposits for steady income

Open foreign currency accounts with E.SUN, Taiwan Bank, etc., deposit into fixed deposits online, starting from 10,000 Yen, with annual interest of 1.5-1.8%. A 10,000 Yen deposit for a year earns about 150-180 Yen (NT$30-36). It may seem small, but zero risk. Combine with staggered exchange strategies: deposit monthly, accumulating 12 deposits a year, earning different fixed deposit periods’ interest, resulting in decent total income by year-end.

2. Yen savings insurance (mid-term holding)

Cathay, Fubon life offer Yen savings insurance with guaranteed interest rates of 2-3%, higher than fixed deposits. Lock-in for 3-6 years, suitable for medium-term funds.

3. Yen ETFs for growth

Yuanta 00675U tracks the Yen index, can be bought as fractional shares via broker apps, suitable for dollar-cost averaging. Management fee 0.4% per year, lower than forex trading fees.

4. Forex trading for swing operations

Trade USD/JPY or EUR/JPY directly on forex platforms. Classic way to capture exchange rate fluctuations, with two-way trading and 24-hour operation. But it involves risks from BOJ rate hikes and global arbitrage unwinding.

Pre-exchange notes: cash rate, limits, tax

Difference between cash rate and spot rate

Cash rate is the rate banks offer for physical banknotes/coins, usually 1-2% worse than the international spot rate (T+2 settlement). Paying cash on the spot incurs higher costs; spot rates are more favorable but require waiting for T+2 settlement.

Foreign currency ATM withdrawal limits

From October 2025, many banks will strengthen anti-fraud measures, reducing third-party digital account limits to 100,000 NT per day. Some banks like CTBC, Taishin have daily limits of 120,000-150,000 NT; cross-bank limits depend on issuing bank. It’s recommended to split withdrawals or use your own bank card to avoid cross-bank fees.

Exchanging over 100,000 NT

Requires declaration of source of funds; banks will ask about the purpose (investment, travel, etc.). Under 20 years old, need parental consent and signature.

Tax on yen fixed deposit interest

Foreign currency fixed deposit interest is considered offshore income. If annual interest exceeds 1 million NT, it must be included in comprehensive income tax return; tax rate depends on individual income brackets. Small deposits earning only a few hundred NT per year usually don’t require special declaration.

Final recommendations

• Below 50,000 NT, urgent needs: go directly to ATM or counter, don’t worry about cost
• 50,000-200,000 NT, planning to travel: use Taiwan Bank online exchange + airport pickup, cost-effective and convenient
• Over 200,000 NT, planning fixed deposit investment: stagger online exchange + foreign currency account, gradually build fixed deposit holdings, earning fixed deposit interest along the way
• Frequent forex traders: consider forex platforms, but accept volatility risks

In summary, yen is no longer just for travel pocket money; it also functions as a hedge and earns fixed deposit interest. By applying staggered exchange and proactive management, you can make your money work harder—saving on costs, earning interest, and protecting against market fluctuations.