What is the smartest way to exchange Japanese yen? A thorough comparison of four methods.

6 minutes

Updated on: 2025-06-06 07:17

Author: Edward

Source: DepositPhotos

Why exchange for Japanese Yen?

In Taiwan, when it comes to foreign currency exchange, many people first think of Japanese yen. This is not just because they like traveling to Japan, but also because the Japanese yen is quite a prominent currency in everyday life as well as in financial investments.

Everyday uses: travel, shopping, studying abroad

Travel Expenses: Japan is the most loved travel destination for Taiwanese people, with cash needed for local transportation, snacks, entrance fees, etc. in places like shopping in Tokyo and Osaka, skiing in Hokkaido, and vacationing in Okinawa (even though credit cards are widely accepted, many small shops, onsen inns, and markets only accept cash).

Proxy Purchasing and Online Auctions: People who like Japanese pharmaceuticals, clothing, and anime goods often pay proxy purchasers or directly to Japanese websites in Japanese yen.

Studying Abroad and Working Holiday: People who plan to stay in Japan for a long time often exchange money in advance to avoid increased expenses due to sudden exchange rate fluctuations.

Perspective of the Financial Market: The Japanese Yen is one of the three major safe-haven currencies in the world.

1. Characteristics as a Safe Asset

The Japanese yen has long been recognized in the market as one of the three major safe-haven currencies (the other two being the US dollar and the Swiss franc). During times of turmoil in the international market, such as wars, recessions, and significant fluctuations in financial markets, investors often purchase the Japanese yen as a risk hedge.

2. Low Interest Rates and Arbitrage Trading

Japan has maintained an ultra-low interest rate policy for a long time, and the Japanese yen has become a "financing currency." Many investors borrow the low-interest Japanese yen and convert it into high-yielding currencies (such as the US dollar and Australian dollar) for investment. When market risk increases, they unwind their positions and buy back yen, which can lead to a significant influx of funds back into the yen, causing it to rise sharply in a short period.

Four Ways to Exchange Japanese Yen in Taiwan

1. Direct exchange from New Taiwan Dollar at banks and airports

The first method is to go to the nearest bank branch or airport branch to purchase Japanese yen. But this method is not very recommended. The costs are too high.

When exchanging currency at the counter, it is calculated at the "cash selling" rate. Taking the Taiwan Bank's Japanese yen rate as an example, the current cash selling rate as of June 5, 2025, is 0.2125 Taiwan dollars per yen, and some banks also charge a fee (usually a fixed fee of 100 Taiwan dollars).

• Advantages: Easy and highly reliable, with a variety of denominations available. Small denomination banknotes can also be exchanged.
• Disadvantages: Bank cash rates are usually worse than spot rates. You need to align with bank operating hours. There may be fees involved.
• Suitable for: People who are not familiar with online operations and need human support, and those who need to exchange money hurriedly at the airport.

2. Online exchange, Japanese yen withdrawal at the counter

The second method is to use the foreign currency account that you usually use for regular deposits or foreign exchange investments to exchange online. Monitor the trends in exchange rates constantly and buy at a low price with the most favorable "spot selling" rate. However, since this method does not involve cash transactions, when withdrawing cash from the foreign currency account, banks typically charge a foreign exchange margin fee.

You can exchange money online 24 hours a day, and the advantage is that you can diversify the currency fluctuation risk by making decentralized purchases. To withdraw cash from a foreign currency account, you need to either go through the counter to complete the procedure or use a foreign currency ATM, but both options are limited to the bank's customers.

• Advantages: Allows for decentralized purchases, obtains an average rate, and has lower fees than counter exchange.
• Disadvantages: It is necessary to open a separate foreign currency account, and there are fees when withdrawing cash.
• Suitable for: Those with experience in foreign exchange investment, those who frequently use foreign currency, and those who have foreign currency accounts.

3. Online currency reservation, receiving Japanese yen at the counter

The biggest difference between "online foreign exchange reservation" and "online currency exchange" is that an external foreign currency account does not need to be opened for online foreign exchange reservations. On the official bank website, you simply select the currency, amount, withdrawal date, and withdrawal branch, and transfer funds to the specified account. This method requires you to go to the bank, but in reality, you just need to reserve foreign currency exchange in advance and receive the foreign currency at the counter with the transaction notification and identification.

Another common method is to reserve a cash withdrawal at the airport branch before departure and collect the cash at the counter on the day of arrival at the airport.

The major advantage of online foreign exchange reservations is that there is no need to open a foreign currency account, which typically offers preferential exchange rates and fee waivers, allowing you to save on exchange costs. The disadvantage is that advance reservations are required, and withdrawals can only be made during bank operating hours. Additionally, once you select a withdrawal branch, you cannot change the location.

• Benefits: No foreign currency account required, preferential standard rates available, no fees. Withdrawals at airport branches are also possible.
• Disadvantages: Advance reservations are required, and it is necessary to align with bank business hours, and once a specified branch is chosen, it cannot be changed.
• Suitable for: Those who want to withdraw cash at the airport at a preferred rate.

Withdraw Japanese yen at foreign currency ATMs

The use of foreign currency ATMs has become a popular method in recent years, allowing withdrawals 24 hours a day, with the advantage of being able to withdraw directly from ATMs at airports. This method supports withdrawals not only for its own customers but also for customers from other banks, and the rates are calculated at the time's "cash selling rate". There are two types of withdrawal methods for foreign currency ATMs:

• If you withdraw from a Taiwan Dollar account, you can save on exchange fees, and there is only a low fee of 5 Taiwan Dollars for withdrawals from other banks.
• Withdrawals from foreign currency accounts usually incur fees, and the charges vary by bank, so it is necessary to check in advance.

However, the number of foreign currency ATMs is limited, and the currencies and amounts offered are also restricted, usually only major currencies such as US dollars, Japanese yen, euros, and Chinese yuan. Especially in crowded places, there may not be enough cash in the foreign currency ATMs, so it is recommended not to wait until the last moment to withdraw.

• Advantages: Withdrawals available 24 hours a day. Supports withdrawals from other banks, providing high flexibility. You can save on exchange fees by withdrawing from a New Taiwan Dollar account.
• Disadvantages: The locations, currencies, and denominations of foreign currency ATMs are limited.
• Suitable for: People who don't have time to go to the bank, those who need to withdraw money quickly at the airport.

Frequently Asked Questions about Japanese Yen Exchange

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

The cash exchange rate is the rate provided by banks and exchange offices for the buying and selling of cash (banknotes/coins), applicable to personal travel exchanges and spot transactions. It has the advantage of completing cash transfer on-site, but the usual rates are poor. The spot exchange rate is the rate at which settlement is completed within 2 business days (T+2) in the foreign exchange market, applicable to electronic transfer transactions that do not involve cash transfer. It is commonly used for interbank foreign exchange transactions, corporate import and export settlements, and personal remittances between foreign currency accounts. The rates are favorable, but settlement on T+2 is required.

Q. How much is 10,000 New Taiwan Dollars in Japanese Yen?

To calculate how many yen you can exchange for 10,000 New Taiwan Dollars, you need to refer to the current exchange rate.

Exchange Calculation: [Yen Amount = Taiwan Dollar Amount × Current Rate (TWD/JPY)]

For example, with the rate from Taiwan Bank on June 5, 2025, the current TWD/JPY cash selling rate is 4.708, so 10,000 New Taiwan Dollars can be exchanged for approximately 47,080.98 yen.

Q. Is it a good time to buy Japanese yen?

According to the latest market data for 2025, the yen exchange rate shows significant fluctuations. At the beginning of the year, the USD/JPY started around 158, and after the Bank of Japan raised the policy interest rate to 0.5% on January 24, the yen appreciated, causing the USD/JPY to drop to a low of about 145.19 on April 6. However, due to the continued impact of the interest rate differential between Japan and the United States, it fluctuated again in the range of 153-155 in May. As for the TWD/JPY, the rate in January was 1 Taiwanese dollar = 4.46 yen, but in April, due to the yen appreciation, it temporarily rose to a low of 4.28, and as of June 6, 2025, the TWD/JPY rate is about 4.81.

The current yen exchange rate is at a critical turning point, influenced mainly by three factors:

1. The pace of the Bank of Japan's normalization of monetary policy may show signs of further reduction in the scale of bond purchases at the June meeting.
2. The timing of interest rate cuts by the Federal Reserve; currently, the market predicts that a rate cut cycle may begin in September, and if the interest rate differential narrows, the decline of the yen may stop and potentially rebound.
3. The supportive power of geopolitical risks for safe assets.

In the market, it is generally believed that if the United States enters a rate-cutting cycle while Japan continues to tighten its policies, the yen could recover to around 145 or even stronger against the USD/JPY in the second half of the year.

For investors with currency exchange needs, the current levels are relatively favorable compared to the past two years. If you have currency exchange needs for travel, shopping, or investment, it is recommended to adopt a diversified exchange strategy:

Conservative: Exchange 30% at the current price (4.81), and if USD/JPY breaks 155 or the TWD/JPY rate rises above 4.85, add an additional 20%.

Active: Consider increasing to 70% if the Bank of Japan shows signs of further rate hikes in June after exchanging 50%.

Additionally, it is necessary to pay special attention to the Bank of Japan's interest rate decision in June and the U.S. employment statistics in July, as these two events could serve as important catalysts for the recent turning point in exchange rates.

Other Methods of Investing in Japanese Yen

In addition to the fact that yen exchange transactions are very active in Taiwan, investors can also trade yen currency pairs such as USD/JPY and EUR/JPY directly.

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