Japanese Yen exchange rate hits a new high, should you enter in 2025? Complete exchange plan and investment guide

Why is the Japanese Yen Worth Exchanging? From Hedging Asset to Investment Allocation

Many people’s understanding of the yen still stays at the “pocket money for travel abroad” stage, but in reality, the yen is becoming Taiwan investors’ preferred hedge.

The Number One Safe-Haven Currency Globally

The yen is listed alongside the US dollar and Swiss franc as one of the world’s three major safe-haven currencies, and this is no coincidence. Japan’s economic system is stable, and its government debt is relatively manageable. Whenever geopolitical tensions or market turbulence occur, large amounts of capital flow into the yen seeking refuge. For example, during the Russia-Ukraine conflict in 2022, the yen appreciated by 8% within a week, enough to offset the 10% decline in the stock market during the same period. For Taiwanese investors, holding some yen positions is like adding a layer of insurance against Taiwan stock market fluctuations.

Classic Currency Pair for Interest Rate Arbitrage

Japan has maintained an ultra-low interest rate policy (currently about 0.5%) for a long time, making the yen a representative “funding currency.” Many professional traders borrow yen at low interest rates and convert to USD (with a US-Japan interest rate differential of about 4.0%) for arbitrage trading. When market risk increases, these positions are closed out, and yen is bought back, further pushing up the yen’s appreciation. For ordinary investors, this indicates that the yen has long-term upward momentum.

Is Now a Good Time to Enter? Timing Analysis

As of December 2025, the TWD/JPY exchange rate is about 4.85, up 8.7% from 4.46 at the beginning of the year. This appreciation is mainly driven by the Bank of Japan’s policy shift—Governor Ueda and his recent hawkish remarks have raised market expectations of rate hikes to 80%, with a 0.25 basis point increase to 0.75% expected at the December 19 meeting (a 30-year high).

Japanese government bond yields have risen to a 17-year high of 1.93%, and USD/JPY has fallen from a high of 160 at the start of the year to 154.58. In the short term, it may hover around 155, but medium to long-term forecasts suggest it could fall below 150. The recommended timing for currency exchange is: Entering now has hedging value, but it’s crucial to operate in batches to avoid full conversion at short-term fluctuations.

In the second half of the year, Taiwan’s currency exchange demand increased by 25%, mainly due to the recovery of tourism and retail hedging needs, reflecting the growing attractiveness of the yen.

Four Major Exchange Methods Fully Explained

Method 1: Bank Counter, the Most Traditional but Most Expensive

Bring TWD cash directly to a bank or airport to exchange for yen cash. This method uses the “cash selling rate,” which is about 1-2% worse than the spot rate. Plus, some banks charge handling fees. Exchanging 50,000 TWD might cost around 1,500-2,000 TWD.

For example, Taiwan Bank’s rate on December 10, 2025, shows a cash selling rate of about 0.2060 TWD per yen.

Quick reference for cash selling rates at various banks:

Advantages: Safe and reliable, denominations available (1,000, 5,000, 10,000 yen), staff assistance on-site.
Disadvantages: Less favorable rates, limited to banking hours (9:00-15:30 on weekdays).
Suitable for: Travelers unfamiliar with online operations or needing urgent cash at the airport.

Method 2: Online Exchange + ATM Withdrawal, Most Flexible

Use bank app or online banking to convert TWD into foreign currency accounts, enjoying near spot rates (about 1% better than cash selling rate), then withdraw cash as needed from foreign currency ATMs. For 50,000 TWD, the cost is about 500-1,000 TWD.

Fubon Bank’s foreign currency ATMs are especially convenient, allowing direct withdrawal from TWD accounts, with a daily limit of 150,000 TWD and no exchange handling fee.

Advantages: 24/7 operation, ability to operate in batches for average cost, better exchange rates.
Disadvantages: Need to open a foreign currency account first, withdrawal incurs additional fees.
Suitable for: Those experienced in forex, planning long-term holdings or investing in yen deposits.

Method 3: Online Currency Purchase Reservation, the Best Choice Before Traveling

No need to have a foreign currency account. Simply reserve currency exchange on the bank’s website, fill in currency, amount, pickup branch, and date. After transferring funds, bring ID and transaction notification to pick up in person. Taiwan Bank’s “Easy Purchase” online exchange is completely free (pay with TaiwanPay for only 10 TWD), with about 0.5% favorable rate. Exchanging 50,000 TWD costs about 300-800 TWD.

Taoyuan Airport has 14 Taiwan Bank counters, including 2 open 24 hours, making it especially convenient to withdraw cash directly before departure.

Advantages: Favorable rates, often no handling fee, can specify airport pickup, well-planned.
Disadvantages: Need to book 1-3 days in advance, pickup only during bank hours.
Suitable for: Well-planned travelers who want easy airport cash withdrawal.

Method 4: Foreign Currency ATM Self-Service Withdrawal, Most Convenient Emergency Option

Use a chip-enabled bank card to withdraw yen directly from foreign currency ATMs, supporting 24-hour operation, with a cross-bank withdrawal fee of only 5 TWD. There are about 200 foreign currency ATMs across Taiwan, mainly in urban areas.

Note that Japan’s ATM withdrawal services will be adjusted by the end of 2025, requiring the use of international cards (Mastercard/Cirrus). Due to limited ATM locations and potential sell-outs during peak travel seasons, it’s advisable not to wait until the last minute.

Advantages: Instant 24-hour withdrawal, high flexibility, lower fees by deducting from TWD account.
Disadvantages: Limited locations and denominations (fixed 1,000/5,000/10,000 yen), cash may run out during peak times.
Suitable for: Busy professionals with no time for counter visits or urgent cash needs.

Cost and Scenario Comparison of the Four Methods

What’s Next After Exchanging to Yen? Investment Strategies for Growth

Holding yen should not be idle and interest-free. Depending on your investment style, choose suitable growth methods:

Capital Preservation: Yen Fixed Deposit (Annual interest rate 1.5-1.8%)

Open foreign currency accounts at E.SUN, Taiwan Bank, etc., starting from 10,000 yen. Although the interest rate is low, it’s stable with minimal risk, especially suitable for travelers going abroad in the short term.

Mid-term: Yen Insurance (Guaranteed interest rate 2-3%)

Purchase yen savings insurance from Cathay, Fubon Life, etc., combining protection and returns, locking in mid-term gains.

Growth: Yen ETFs (00675U, 00703)

Yuan Da’s 00675U tracks the yen index, with an annual management fee of only 0.4%. Can be bought in fractional shares via securities apps, suitable for regular investing and risk diversification.

Swing Trading: Forex Trading USD/JPY, EUR/JPY

Trade yen currency pairs directly on forex platforms. Advantages include two-way trading, 24-hour operation, and small capital requirements. Choose platforms with zero commissions and low spreads, and use stop-loss and take-profit tools to better capture exchange rate fluctuations.

Quick Glossary of Key Terms

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

Cash exchange rate is the buy/sell rate banks offer for physical banknotes/coins, convenient for carrying cash but usually 1-2% worse than the spot rate. The spot rate is the foreign exchange market’s T+2 settlement rate, mainly used for electronic transfers and cashless transactions, closer to international market prices, but requires waiting for settlement.

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

Exchange formula: Yen amount = TWD amount × current rate. Using Taiwan Bank’s December 2025 cash selling rate of 4.85, 10,000 TWD can get about 48,500 yen; with the spot rate of 4.87, about 48,700 yen, a difference of only 200 yen (about TWD 40).

Q. What do I need to bring for counter exchange?

Taiwanese need to bring ID + passport; foreigners need passport + residence permit. If online reservation is made, bring transaction notification. Under 20 years old requires parental accompaniment. Large exchanges (over 100,000 TWD) may require source of funds declaration.

Q. What’s the limit for foreign currency ATM withdrawals?

Starting October 2025, new regulations will adjust withdrawal limits:

It’s recommended to split withdrawals or use your own bank card to avoid cross-bank fees. During peak seasons (like airport travel periods), cash may sell out quickly, so plan ahead.