Recently, many people have asked me whether it’s worthwhile to exchange US dollars for Japanese yen. To be honest, it depends on the situation. At the end of last year, the TWD/JPY exchange rate once reached 4.85, and many people became tempted and started thinking about whether they should exchange some TWD for yen. But now that it’s mid-May, the exchange rate has already changed—this is the real point.

First, let’s talk about why so many people want to exchange TWD for yen. On the one hand, of course, it’s because of travel—Japan is still the favorite destination for Taiwanese people. But the deeper reason is that the yen is one of the world’s three major safe-haven currencies, alongside the US dollar and the Swiss franc. When global stock markets fall and geopolitical risks heat up, smart investors tend to move toward the yen because Japan’s economy is stable and its debt is low. For example, during the Russia-Ukraine conflict in 2022, the yen rose 8% in a week, directly cushioning the damage from the decline in stocks. For Taiwanese people, exchanging yen is not just for fun—it’s fundamentally a tool to hedge against risks in the Taiwan stock market.

Now let’s get to the main topic: how to exchange yen in the most cost-effective way. Many people think a bank is the only option, but that’s a big mistake. I’ve organized four channels, and the cost differences could mean you end up paying several thousand more TWD.

The first is the traditional method: exchanging cash at a bank counter. This is the most old-fashioned approach. You simply take your TWD cash to a bank or airport counter and exchange it on the spot for Japanese yen paper banknotes. It sounds convenient, but the problem is that banks use a “cash selling exchange rate,” which is usually 1% to 2% worse than the market rate. For example, as of the end of last year at Bank of Taiwan, the cash selling exchange rate was about 0.2060 TWD per 1 yen. If you exchange 50,000 TWD, you would likely lose about 1,500 to 2,000 TWD. Also, it’s limited by the bank’s business hours—on weekdays, it’s only open until 3:30 PM. Unless you’re truly in a hurry, this is not recommended.

The second is exchanging online into a foreign-currency account, and then withdrawing cash. This method uses the “spot selling exchange rate,” which is about 1% more favorable than the cash exchange rate. You can operate it 24 hours a day using your bank’s app. You can enter the market in batches to average your cost, which is especially suitable for people who closely watch exchange rates. The downside is that withdrawing cash requires an additional fee, and interbank withdrawals may cost 5 to 100 TWD. But if you’re accustomed to holding a foreign-currency account, this is a very cost-effective approach. And since Japanese yen fixed deposits currently offer annual interest rates of about 1.5% to 1.8%, holding the funds can also earn interest.

The third is online exchange with direct reservation for pickup—I personally like this one the most. You don’t need to open a foreign-currency account. Just go to the bank’s official website, fill out the form, choose the amount and the branch for pickup, and then bring your ID to collect it. Bank of Taiwan’s “Easy Purchase” online exchange even waives handling fees, with an exchange-rate advantage of 0.5%. The most convenient part is that you can specify an airport branch for pickup. Reserve the day before you go abroad, then pick it up directly at the airport the next day—saving you a lot of hassle. For travelers with strong planning, it’s basically tailored.

The fourth is withdrawing via a foreign-currency ATM. This is the most flexible option. Use a chip-enabled financial card to withdraw 24 hours a day. Cross-bank withdrawals only charge a 5 TWD fee and are completely not limited by bank business hours. The downside is that there aren’t many locations—there are only about 200 nationwide—and during peak times, cash often runs out. But if you suddenly need cash, this really can save the day.

When it comes to whether exchanging US dollars for Japanese yen is worthwhile, my answer is: it depends on timing. The exchange rate at the end of last year was indeed good, but now it’s already May, and the situation is completely different. Expectations for the Bank of Japan to raise interest rates are heating up. The USD/JPY exchange rate has dropped from around 160 at the start of the year to about 154, so short-term fluctuations may continue to swing. My suggestion is to enter the market in batches—don’t exchange everything at once—so the risk is minimized.

After you exchange into Japanese yen, don’t just let the money sit there. You can consider a few allocation directions. The most stable option is a Japanese yen fixed deposit. Open a foreign-currency account with E.SUN or Bank of Taiwan, with an annual interest rate of 1.5% to 1.8% and a minimum of 10,000 yen. If you want to be a bit more proactive, you can look at Japanese yen ETFs—for example, Yuanta 00675U, which tracks the Japanese yen index. Its annual management fee is only 0.4%, making it suitable for dollar-cost averaging. If you’re interested in swing trading, forex trading platforms allow you to directly trade USD/JPY or EUR/JPY, so both long and short positions are possible, with 24-hour trading.

Finally, a few practical reminders. For counter transactions, you need to bring your ID and passport; anyone under 20 must be accompanied by a parent. For large exchanges exceeding 100,000 TWD, you may need to fill out a declaration of the source of funds. Foreign-currency ATM withdrawal limits vary by bank—most are around 100,000 to 150,000 TWD equivalent per day—so it’s recommended to split withdrawals. During peak times like at airports, cash is easy to run out, so planning ahead is essential.

To put it plainly, the Japanese yen is no longer just travel pocket money—it’s an asset that combines both safe-haven and investment value. As long as you follow the two principles of exchanging in batches and not “letting it sit idle” after you exchange, you can minimize costs and maximize returns. For beginners, I suggest starting with online exchange via Bank of Taiwan plus airport pickup, or using a foreign-currency ATM first, and then moving funds into fixed deposits or ETFs based on your needs. This way, not only will your trip abroad be more cost-effective, but when global markets are volatile, you’ll also have an extra layer of protection.