Japanese Yen exchange rate breaks through 4.85! An article explaining the most cost-effective currency exchange method in Taiwan

Is it really cost-effective to exchange for Japanese yen now?

As of December 10, 2025, the TWD/JPY exchange rate has reached 4.85, appreciating about 8.7% from the beginning of the year at 4.46. In other words, spending 1 million TWD this year would have earned a significant amount of Japanese yen. According to the latest statistics, Taiwan’s foreign exchange demand in the second half of the year increased by 25%, mainly driven by the recovery of travel to Japan and hedging capital allocations.

But “cost-effective to exchange now” does not mean “all at once.” Although the yen is stable in the long term, short-term variables such as narrowing US-Japan interest rate spreads and expectations of Bank of Japan rate hikes pose challenges. Therefore, staggered entry and buying on dips are the strategies of smart investors.

Why is it worth exchanging for JPY? Not just for travel

Travel and daily consumption needs

Japan remains the most popular overseas destination for Taiwanese, whether shopping in Tokyo, skiing in Hokkaido, or vacationing in Okinawa, cash payments still account for the majority (credit card penetration is only 60%). Besides travel, groups purchasing Japanese cosmetics, fashion, and anime merchandise also need to pay directly to agents or Japanese websites in yen. For those planning to study abroad or work holiday in Japan, pre-planning currency exchange can avoid extra costs caused by sudden exchange rate fluctuations.

Hedging value in financial investments

The yen is globally recognized as one of the three major safe-haven currencies (alongside USD and Swiss Franc), due to Japan’s stable economy and sound government debt structure. During market turbulence, funds flow into the yen for protection—for example, during the Russia-Ukraine conflict in 2022, the yen appreciated 8% within a week, successfully buffering the 10% decline in global stock markets. For Taiwanese investors, exchanging for yen is not just for travel preparation but also an effective tool to hedge against Taiwan stock market volatility.

Additionally, Japan’s long-term ultra-low interest rate policy makes the yen a “financing currency” for international arbitrage trading. Investors often borrow low-interest yen to buy higher-yield USD investments (about 4.0% US-Japan interest spread), then close positions and buy back yen when risks increase. This arbitrage mode can cause volatility when global interest rates shift, so special attention is needed.

Four practical methods to exchange TWD for yen compared

Many think exchanging yen is just walking into a bank, but they overlook that the exchange rate difference alone can cost you several cups of bubble tea. Here are four main channels based on the latest 2025 rates:

Method 1: Bank counter or airport cash exchange

Process: Bring cash TWD to a bank branch or airport counter to receive yen in cash.

This is the most traditional and straightforward method, but since it uses the “cash selling rate” (about 1-2% worse than the spot rate), the overall cost is higher. For example, Taiwan Bank’s rate on December 10, 2025, is 0.2060 TWD per yen (1 TWD = 4.85 yen). Some banks also charge an additional NT$100-200 handling fee.

Cost estimate: Exchanging NT$50,000 may result in a loss of about NT$1,500-2,000 due to rate differences and fees.

Advantages: Safe, full denominations (1,000, 5,000, 10,000 yen), staff assistance on site.

Disadvantages: Worst exchange rate, limited to bank hours (9:00-15:30 weekdays), additional handling fees.

Suitable for: Those unfamiliar with online operations or needing small, urgent cash (e.g., arriving in Japan and realizing cash is insufficient).

Method 2: Online exchange + foreign currency account management

Process: Use bank app or online banking to convert TWD into yen and deposit into a foreign currency account (using the spot rate). When needed, withdraw cash at counters or via foreign currency ATMs.

This method’s key advantage is about 1% better than cash exchange rates, with 24-hour flexibility for batch operations. For example, E.SUN Bank’s app allows conversion, and withdrawal fees are the difference between spot and cash rates, starting from NT$100.

Cost estimate: Converting NT$50,000 may incur a loss of NT$500-1,000, saving more than half compared to counter exchange.

Advantages: 24/7 operation, ability to average costs over multiple purchases, better rates, suitable for long-term holding.

Disadvantages: Need to open a foreign currency account first (some banks have thresholds), withdrawal fees for cash (NT$5-100).

Suitable for: Those experienced in forex operations, planning to deposit yen or small investments (current yen deposit annual interest rate around 1.5-1.8%).

Method 3: Online currency settlement + airport pickup (most recommended for beginners)

Process: No need to open a foreign currency account. Fill in currency, amount, pickup branch, and date on the bank’s website. After remittance, bring ID and transaction notice to pick up in person.

Taiwan Bank’s “Easy Purchase” online currency settlement launched fee-free policy in 2025 (using Taiwan Pay costs only NT$10), with about 0.5% rate advantage. It’s the most convenient pre-departure reservation method, especially at Taoyuan Airport, which has 14 Taiwan Bank outlets, 2 of which operate 24 hours.

Cost estimate: Exchanging NT$50,000 may result in a loss of NT$300-800, offering the best value.

Advantages: Favorable rates, often no fees, quick airport pickup, transparent reservation system.

Disadvantages: Need to book 1-3 days in advance, pickup time limited by bank hours, branches cannot change reservations on the spot.

Suitable for: Planned travelers who want to pick up cash directly at the airport, especially first-time exchangers.

Method 4: Foreign currency ATM 24-hour self-service withdrawal

Process: Use chip-enabled bank card at foreign currency ATMs to withdraw yen cash, supporting 24-hour operation and interbank withdrawals (NT$5 fee from TWD account).

SinoPac Bank’s foreign currency ATM allows withdrawal of yen from TWD accounts, with a daily limit of NT$150,000 and no additional exchange fee. Note that Japan’s ATM withdrawal service will be adjusted by the end of 2025, requiring international cards (Mastercard/Cirrus) for TWD withdrawals in Japan.

Cost estimate: Exchanging NT$50,000 may incur a loss of NT$800-1,200, with minimal interbank fees.

Advantages: Instant withdrawal, high flexibility, lowest interbank fee, no banking hours restriction.

Disadvantages: Limited locations (~200 units), fixed denominations (1,000/5,000/10,000 yen), cash may run out during peak times.

Suitable for: Those with no time to visit banks or needing urgent cash.

Cost comparison table of four methods

Based on December 2025 data, the most recommended combo for beginners is “Online settlement + ATM”, which locks in favorable rates and retains 24-hour withdrawal flexibility.

Exchange rate trend and investment timing analysis

Current situation analysis

From the high of 160 USD/JPY at the start of the year, the yen has fallen to around 154.58, likely to fluctuate near 155 in the short term. Market expectations of an 80% probability of a rate hike by the Bank of Japan’s Governor Ueda, with a 0.25 bps increase to 0.75% at the December 19 meeting (a 30-year high). Meanwhile, Japanese bond yields hit a 17-year high of 1.93%.

In the context of the US entering a rate cut cycle, the yen may find support, but short-term arbitrage closing risks could cause 2-5% volatility. In the medium to long term, the yen is forecasted to stabilize below 150.

Importance of staggered entry strategy

“Cost-effective to exchange now” versus “all at once” are two different concepts. Investors are advised to adopt a “staggered entry” approach, increasing positions at low points (when TWD/JPY is below 4.80) to avoid risk concentration at a single timing.

Additionally, the movement of Asian currencies like the Korean won, often influenced by regional economic fluctuations, is worth noting. 1 TWD can roughly exchange for 60-70 KRW (with larger exchange rate swings), both of which should be considered in diversified asset allocation.

Value-added strategies after exchanging for yen

After acquiring yen, further asset appreciation can be achieved through various investment options. Here are four suitable for small-scale beginners:

1. Yen fixed deposit: The most stable choice. Open a foreign currency account with E.SUN Bank or Taiwan Bank, deposit yen online, with a minimum of 10,000 yen, annual interest rate 1.5-1.8%. Suitable for low-risk tolerance.

2. Yen insurance policies: Medium-term holding. Yen savings insurance from Cathay Life or Fubon Life, with guaranteed interest rates of 2-3%, combined with pre-set interest, total returns of 3-4%.

3. Yen ETFs: Growth-oriented. For example, Yuanta 00675U tracks the yen index, purchasable as fractional shares via broker apps, suitable for dollar-cost averaging; annual management fee 0.4%, diversified risk.

4. Forex swing trading: High risk, high reward. Direct trading of USD/JPY or EUR/JPY via platforms like Mitrade. Advantages include two-way trading, 24-hour operation, low entry barrier, but requires technical analysis skills.

While yen is a strong hedge, it also faces two-way volatility risks. Rate hikes by the Bank of Japan support the currency, but global arbitrage unwinding or geopolitical conflicts (Taiwan Strait, Middle East) could depress it. Investors should choose appropriate allocations based on their risk tolerance rather than blindly chasing high returns.

Common Q&A about exchanging for yen

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

A: The cash rate (Cash Rate) is the buy/sell rate banks offer for physical bills/coins, convenient for immediate cash transactions; however, it’s usually 1-2% worse than the spot rate, with higher handling costs. The spot rate (Spot Rate) is the market’s T+2 (two business days) settlement rate, used for electronic transfers and interbank settlements, offering more favorable rates close to international market prices.

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

A: Based on Taiwan Bank’s rate on December 10, 2025, the cash selling rate is about 4.85 (1 NT$ = 4.85 yen), so NT$10,000 can exchange for approximately 48,500 yen. Using the spot rate (about 4.87), it’s roughly 48,700 yen, a difference of about 200 yen (roughly NT$40). The difference becomes more significant with larger amounts.

Q: What documents are needed for currency exchange?

A: For cash exchange at counters, Taiwanese citizens need ID + passport; foreigners need passport + residence permit. For online reservations, bring transaction notice. For large amounts (over NT$100,000), declaration of source of funds may be required. Minors under 20 need parental consent and ID; for amounts exceeding NT$100,000, additional source declaration may be needed.

Q: Are there limits on foreign currency ATM withdrawals?

A: Varies by bank. From October 2025, many banks have strengthened anti-fraud measures, with daily limits for third-party digital accounts reduced to NT$100,000. China Trust Bank’s limit is NT$120,000/day; Taishin Bank NT$150,000; E.SUN Bank NT$50,000 per transaction but NT$150,000 per day (including card transactions). Using your own bank card is recommended to avoid cross-bank fees. During peak times (e.g., airports), plan ahead to prevent cash shortages.

Final recommendations

The yen is no longer just “pocket money” for travel but a valuable asset with hedging and investment functions. Whether you plan to travel to Japan next year or want to hedge against TWD depreciation by allocating funds into yen, following the principles of “staggered exchange + don’t just sit on the gains” can minimize costs and maximize returns.

Beginners can start with the simplest options like “Taiwan Bank online settlement + airport pickup” or “foreign currency ATM”, then transition into fixed deposits, ETFs, or forex swing trading based on needs. This way, you not only enjoy more cost-effective travel but also add a layer of asset protection amid global market volatility.