A Comprehensive Comparison of Japanese Yen Exchange Methods: Smartly Utilize Funds with the Optimal Choice

Why Exchange Japanese Yen?

The Japanese yen is an important currency not only for travel purposes but also for financial investment. Let’s understand the reasons why it is utilized in a wide range of situations, from daily life to financial markets.

Practical daily use

• Travel Expenses: Japan is a popular travel destination, and cash payments are necessary for shopping in Tokyo and Osaka, skiing in Hokkaido, and vacations in Okinawa (many small shops, inns, and markets still only accept cash).
• Proxy Purchasing and Online Shopping: When purchasing Japanese pharmaceuticals, fashion items, and anime merchandise, it is often necessary to make payments directly in yen.
• Studying Abroad and Working Holiday: If you are planning a long-term stay in Japan, it is wise to exchange currency in advance to avoid exchange rate fluctuation risks.

The Role of the Japanese Yen in Financial Markets

1. Characteristics as a Safe Asset

The Japanese yen is recognized as one of the three major safe-haven currencies in the world (the others being the US dollar and the Swiss franc). During times of international market instability—such as wars, recessions, and significant fluctuations in financial markets—investors tend to increase their purchases of yen as a risk hedge.

2. Low Interest Rate Policy and Interest Rate Differentials

Japan's long-term low interest rate policy has made the yen function as a "funding currency." Many investors borrow the low-interest yen and convert it into higher-yielding currencies (such as the US dollar and Australian dollar) for investment. When market risk increases, these positions may be unwound to buy back yen, leading to a significant rise in the yen over a short period.

Comparison of 4 Methods for Exchanging Japanese Yen

1. Cash exchange at bank counters or windows

The most common method is exchanging currency at bank counters or airport counters, but this method is not highly recommended due to its low cost efficiency.

At bank counters, the "cash selling" rate is applied. For example, on June 5, 2025, the rate at a specific bank will sell for 1 yen = 0.2125 dollars. Additionally, some banks may charge a fixed fee (approximately equivalent to 100 yuan).

• Advantages: Easy and secure, various denominations of banknotes available
• Disadvantages: The cash selling rate at banks is generally less favorable than the spot rate, requires alignment with business hours, and may incur fees.
• Suitable for: Those who are not familiar with online operations, those who need human support, those who suddenly need cash at the airport.

2. Online Foreign Currency Exchange and Counter Collection

The second method is to utilize the foreign currency account that you normally use for foreign currency investments or deposits, and purchase at the instant sell rate at the optimal timing while observing the fluctuations in the exchange rate. However, since this method does not directly involve cash, there are generally fees incurred when withdrawing cash from the foreign currency account.

The advantages are that you can exchange money online anytime, 24 hours a day, and you can also diversify your purchases to spread the risk of exchange rate fluctuations. Cash withdrawals from foreign currency accounts require a visit to the counter or use of foreign currency ATMs, and typically, only the bank where the account was opened can be used.

• Advantages: Risk diversification through decentralized purchasing, lower fees compared to counter exchange.
• Disadvantages: Requires opening a foreign currency account, fees incurred for cash withdrawals
• Suitable for: Experienced foreign exchange traders, individuals who use foreign currency on a daily basis, holders of foreign currency accounts.

3. Online Reservation and Counter Pickup

The biggest difference between "online booking" and "online currency exchange" is that online booking does not require you to open a foreign currency account. You simply choose the type of currency, amount, receipt date, and receipt branch on the bank's website and transfer to the specified account. This method requires a bank visit, but essentially, you are just reserving foreign currency exchange in advance and collecting the foreign currency at the counter with your identification.

Another common method is to reserve a cash withdrawal at the airport branch before departure and pick it up at the airport counter on the day of travel.

• Benefits: No foreign currency account required, preferential rates usually applied, fees waived in some cases, available for collection at airport branches.
• Disadvantages: Advance reservation is required, must align with bank hours, changes to the specified branch are not allowed.
• Suitable for: Those who want to withdraw cash at favorable rates at the airport.

Withdrawal of Japanese Yen at Foreign Currency ATMs

Using foreign currency ATMs has become a popular method in recent years, with the advantage of being able to withdraw 24 hours a day and directly from ATMs at airports. This method is not limited to the bank where the account was opened, allowing the use of ATMs from other banks as well. The rate applied is the current 'cash selling rate'. There are two methods for withdrawing from foreign currency ATMs:

• Withdrawals from local currency accounts: You can save on exchange fees, with only a small fee (approximately 5 yuan equivalent) even when using ATMs from other banks.
• Withdrawals from foreign currency accounts: Usually incurs fees, which vary by bank.

As a disadvantage, the number of foreign currency ATMs is limited, and the currencies offered are also restricted (only major currencies such as USD, JPY, EUR, and CNY). Additionally, in crowded places, there is a possibility of running out of cash, so it is advisable to plan with some leeway.

• Advantages: Withdrawals available 24 hours a day, compatible with other bank ATMs, possible to save on fees by withdrawing from local currency accounts.
• Disadvantages: There are restrictions on the locations of foreign currency ATMs, the currencies handled, and the denominations of banknotes.
• Suitable for: Those who do not have time to go to the bank, those who suddenly need cash at the airport.

Frequently Asked Questions about Japanese Yen Exchange

Q. What are the cash rate and the spot rate?

The cash rate is the rate offered by banks and exchange offices for the buying and selling of cash (banknotes/coins), applicable to travelers' exchanges and physical cash transactions. There is an advantage of receiving cash on the spot, but generally, the rate is unfavorable. The spot rate is the rate settled within two business days (T+2) in the foreign exchange market, applicable to electronic transfer transactions that do not involve cash delivery. It is used for interbank foreign exchange transactions, corporate import and export settlements, and personal foreign currency account remittances, offering a favorable rate, but requiring settlement at T+2.

Q. How much is 10,000 yuan in yen?

The amount that can be exchanged for Japanese yen varies depending on the current exchange rate.

Formula: [Japanese Yen Amount = Domestic Currency Amount × Current Exchange Rate]

For example, at the rate of a specific bank on June 5, 2025, the cash selling rate is 4.708, so 10,000 yuan can be exchanged for approximately 47,080.98 yen.

Q. What documents are needed for currency exchange?

When conducting foreign currency cash transactions at the counter, citizens require an ID + passport, while foreigners need a passport + residence card.

If you are exchanging as a company, you will need commercial registration certificate documents.

If you have made an online reservation (online exchange reservation) in advance, a transaction notification is also required.

Is the current exchange of Japanese Yen favorable?

According to the latest market data from 2025, there are clear fluctuations in the exchange rate of the Japanese yen. The USD/JPY exchange rate started at around 158 at the beginning of the year, and after the Bank of Japan raised the policy interest rate to 0.5% on January 24, the yen appreciated, reaching a low of about 145.19 on April 6. However, the interest rate differential between Japan and the US continues to have an impact, and in May it fluctuated again in the range of 153-155. For the local currency/yen, the TWD/JPY rate in January was 1 unit = 4.46 yen, and in April, due to the yen appreciation, it temporarily recorded a low of 4.28. As of June 6, 2025, the TWD/JPY rate is approximately 4.81.

The current yen rate is at an important turning point, influenced mainly by three factors:

1. The pace of normalization of the Bank of Japan's monetary policy (indicating the possibility of further reduction in the scale of bond purchases at the June meeting)
2. Timing of the Federal Reserve's interest rate cut (Currently, the market expects the rate cut cycle to begin in September, and the narrowing interest rate differential is a factor for yen appreciation)
3. The Impact of Geopolitical Risk on Safe Haven Currencies

In the market, it is generally believed that if the United States enters a rate-cutting cycle while Japan continues its tightening policies, the yen could recover to around 145 USD/JPY or even stronger levels 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, we recommend adopting a diversified purchasing strategy:

Conservative Approach: Exchange 30% at the current price (4.81), and if USD/JPY exceeds 155 or TWD/JPY goes above 4.85, exchange an additional 20%.

Proactive Approach: Considering to increase to 70% if the Bank of Japan signals further rate hikes in June, currently at 50% exchange.

Other Methods of Investing in Japanese Yen

Not only can investors engage in yen exchange transactions, but they can also directly trade yen currency pairs such as USD/JPY and EUR/JPY.

Trading on the foreign exchange platform is very simple; you can start online trading just by entering the information required to open an account. It supports deposits in your local currency, allowing you to start trading yen currency pairs in just 3 minutes. You can deploy various strategies such as day trading and swing trading depending on market conditions!

In foreign exchange trading, you can participate in the market with a small amount of capital and engage in market movements by paying only a portion of the margin. It is more flexible than stock trading, allowing you to buy and sell at any time, 24 hours a day.