The Japanese Yen exchange rate soars by 8.7%. Is this the best time for investors to hop on the risk-averse train?

As of December 10, 2025, the NT dollar has surged to 4.85 against the Japanese Yen, compared to 4.46 at the beginning of the year, an increase of 8.7% in just one year. What signals are hidden behind this rally?

For Taiwanese investors looking to allocate foreign currency assets, the Japanese Yen is evolving from a simple “travel currency” into an important hedging tool. The most urgent question now is: Is it worthwhile to exchange for Yen now? The answer is: Yes, but you need to know the right methods.

Why Are Institutional Investors Snatching Up Yen?

The Yen has become one of the world’s three major safe-haven currencies (alongside the US dollar and Swiss franc), supported by solid fundamentals.

Japan’s economy is stable, with strong debt controllability. Compared to the high global debt levels, Japan’s policy adjustments are relatively cautious, causing funds to naturally flow into Yen during geopolitical tensions or market volatility. During the Russia-Ukraine conflict in 2022, the Yen appreciated 8% in a single week, while global stock markets fell 10%, demonstrating its safe-haven effect.

Ultra-low interest rate policies create an “arbitrage currency.” The Bank of Japan has maintained a super-low interest rate of 0.5% for a long time, making Yen the cheapest currency for financing. Investors can borrow Yen at low cost, convert to higher-yield USD (the USD/JPY interest rate differential has reached 4.0%), and close positions when risks rise. This arbitrage trade tends to unwind quickly during global liquidity crunches, further boosting Yen.

The Bank of Japan is on the verge of raising interest rates. Recent hawkish comments from Governor Ueda have pushed market expectations to 80%, with a consensus that the December 19 meeting will raise rates to 0.75% (a 30-year high). Japanese government bond yields have climbed to a 17-year high of 1.93%, attracting more international capital inflows.

In other words, exchanging for Yen now is not just about convenience for travel, but about catching the pulse of global capital flows.

Four Ways to Exchange Yen, with Vast Cost Differences

Many think exchanging Yen at banks is straightforward, but the costs can differ by over a thousand NT dollars (based on 50,000 TWD). Let’s break down each method:

Method 1: Cash Exchange at Counter — Most convenient but most expensive

Bring NT cash directly to a bank branch or airport counter to receive Yen in cash immediately. Simple to operate, but banks use “cash selling rates” (1-2% higher than spot rates), and some banks charge handling fees.

For example, Taiwan Bank’s rate on December 10, 2025, at 9:18 AM was 0.2060 TWD/Yen (4.85 Yen/TWD).

Cost for exchanging 50,000 TWD in cash:

Suitable for: Urgent small amounts, airport needs, unfamiliar with online operations.

Method 2: Online Exchange + Cash Pickup — Balance cost and convenience

Use bank app or online banking to convert TWD to Yen at “spot sell rate” (~4.87 Yen/TWD), deposit into a foreign currency account, then pick up cash at a branch or foreign currency ATM. Subsequent withdrawals incur exchange fee (~100-200 NT$).

Ideal for observing exchange rate trends and averaging costs over multiple entries at low points. E.SUN Bank’s app supports this, with a minimum of 10,000 Yen, and the foreign currency account offers 1.6% annual interest.

Cost for 50,000 TWD via this method: About 500-1,000 NT$

Suitable for: Experienced forex investors planning long-term Yen holdings or fixed deposits.

Method 3: Online Currency Conversion + Airport Pickup — Pre-departure essential

No need for a foreign currency account. Fill in amount, denomination, pickup branch, and date on the bank’s website. After transfer, bring ID and transaction notice to pick up at the counter. Taiwan Bank’s “Easy Purchase” service is fee-free (using TaiwanPay costs only 10 NT$), with a 0.5% rate advantage.

Taoyuan Airport has 14 Taiwan Bank counters (2 open 24 hours), ideal for quick airport pickup before travel, avoiding queues.

Cost for 50,000 NT$: About 300-600 NT$

Suitable for: Planned travelers who want quick airport cash before departure.

Method 4: Foreign Currency ATM — 24/7 cash withdrawal

Use a chip-enabled financial card at foreign currency ATMs to withdraw Yen cash, operational 24 hours. E.SUN Bank’s foreign currency ATMs allow withdrawal from TWD accounts, with a daily limit of 150,000 NT$, no exchange fee, and only 5 NT$ cross-bank fee.

Disadvantages: Limited locations (~200 units nationwide), cash may run out during peak times, fixed denominations (1,000/5,000/10,000 Yen), not suitable for special denomination needs.

Cost for 50,000 NT$: About 800-1,200 NT$

Suitable for: Those who don’t have time to visit banks or need urgent cash.

Yen Exchange Rate Trend: Should I Wait?

Based on the latest data as of December 2025, USD/JPY is around 154.58, down about 3.4% from the high of 160 at the start of the year. In the short term, the BOJ’s rate hike expectations support Yen, but there’s also risk of unwinding arbitrage trades.

Mid-term forecast: USD/JPY may fluctuate around 155, but the long-term trend points below 150. For TWD/JPY, this means the current 4.85 level is relatively high, but not necessarily the absolute peak.

Strategy suggestion: Don’t exchange all at once. Use a phased approach—convert part weekly or monthly—to reduce exchange rate risk. Combine this with your next investment plans (fixed deposits, ETFs, or forex trading) to generate returns on the Yen you acquire, rather than letting it sit idle with zero interest.

After Buying Yen, What’s Next?

Holding Yen passively in your account wastes the appreciation opportunity. Here are four simple options for small investors:

1. Yen Fixed Deposit: Most stable. Open an FX account at E.SUN or Taiwan Bank, deposit online, with a minimum of 10,000 Yen, earning 1.5-1.8% annually. For 1 million Yen, annual interest is about 15,000 Yen.

2. Yen Insurance Policy: Medium-term holding. Cathay or Fubon offer Yen savings insurance with guaranteed 2-3% interest, combining protection and returns.

3. Yen ETFs: Growth-oriented. Yuanta 00675U tracks Yen index, tradable in fractional lots, suitable for dollar-cost averaging. Management fee is 0.4% annually, relatively low.

4. Forex Swing Trading: Advanced option. Trade USD/JPY or EUR/JPY directly on forex platforms, supporting long and short positions, 24-hour trading. Suitable for experienced traders.

Quick FAQs

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

Cash rate is the rate banks offer for physical banknotes, allowing immediate delivery but with a 1-2% premium over the international spot rate. Spot rate is the FX market rate settled T+2, closer to global market price but involves waiting. In short: cash is fast but costly; spot is cheaper but takes time.

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

At December 10, 2025, rate of 4.85 Yen/TWD, 10,000 NT$ ≈ 48,500 Yen (cash sale) or 48,700 Yen (spot). Difference about 200 Yen (~40 NT$).

Q: What do I need to bring for my first Yen exchange?

For counter exchange, bring ID + passport (foreigners also need residence permit). If pre-booked online, bring transaction notice. Large amounts (>100,000 NT$) may require source declaration. Under 20, bring guardian.

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

Varies by bank. CTBC allows up to 120,000 NT$ equivalent per day; other banks like Taishin have similar limits (~150,000 NT$). It’s best to split withdrawals or use your own bank card to avoid cross-bank fees.

Q: How much is 10,000 USD in NT$?

At current rate (~32 NT$/USD), about 320,000 NT$. To convert to Yen (4.85 Yen/TWD), roughly 1,552,000 Yen. Rates fluctuate daily; check bank quotes for accuracy.

Summary

Yen is no longer just a travel currency but a hedging and investment asset. The current 4.85 rate is quite attractive, with an 8.7% increase this year. By choosing the right exchange methods and subsequent allocations, you can lower costs and increase returns.

Beginners are advised to start with “online exchange + airport pickup” or “foreign currency ATM,” then diversify into fixed deposits, ETFs, or forex swing trading based on needs. This way, you can enjoy cost-effective travel and gain protection amid global market fluctuations. Seize the current exchange rate opportunity, and consider phased entry—smart currency exchange is all about timing.