I recently discovered a quite interesting phenomenon: more and more people around me are discussing exchanging cash for Japanese yen. At the end of last year, the NT dollar to Japanese yen exchange rate reached 4.85, and many started seriously considering this, but most people actually don’t realize they are losing money.

First, let’s talk about why you should exchange for yen. Many think it’s just for traveling abroad, but in fact, the用途 of the yen goes far beyond that. Besides daily needs like travel shopping, purchasing on behalf of others, or studying abroad, from an investment perspective, the yen is one of the world’s three major safe-haven currencies (the other two are the US dollar and Swiss franc). Japan’s economy is stable, with low debt, and during market turbulence, funds flow into the yen for safety. Think about it—during the Russia-Ukraine conflict in 2022, the yen appreciated 8% in a week, while the stock market dropped 10%. That’s the power of hedging. For Taiwanese investors, exchanging for yen isn’t just for fun; it can also protect assets.

Plus, Japan has maintained ultra-low interest rates (only 0.5%) for a long time, making the yen a “funding currency.” Many borrow yen to exchange for higher-yielding US dollars, with a spread of up to 4%. When risks increase, they close positions and buy back yen. These are all reasons why I think now is a good time to seriously study cash exchange for yen.

But here’s the key—many people think exchanging yen is just as simple as going to the bank, but they don’t realize that just the exchange rate difference can cost you hundreds of dollars more. I’ve summarized four methods for you, calculating actual costs, and the differences are quite significant.

The first is the most traditional over-the-counter currency exchange. Bring NT cash directly to a bank or airport counter to exchange for yen cash. It sounds simple, but the problem is it uses the “cash selling rate,” which is about 1-2% worse than the spot rate, plus possible handling fees. Exchanging 50k NT dollars could result in a loss of NT$1,500 to NT$2,000. I only recommend this as a backup, such as for urgent needs at the airport.

The second is online currency exchange with in-person withdrawal. Use a bank app or online banking to convert NT dollars to yen, using the “spot selling rate,” which is about 1% better than the cash selling rate. If you want cash, you can then go to a bank or foreign currency ATM to withdraw, incurring handling fees but reducing costs to NT$500–NT$1,000. This method is suitable for those experienced with forex, allowing for staggered entry and averaging costs.

The third is online currency settlement. No need for a foreign currency account—just fill out the info on the bank’s website, complete the remittance, and then pick up the cash in person with your ID and transaction notice. Taiwan Bank and Mega International Bank offer this service, and you can even make an appointment to pick up at the airport branch. Taiwan Bank’s “Easy Purchase” online settlement is fee-free, with about 0.5% better exchange rates, meaning a loss of only NT$300–NT$800 on 50k NT dollars. I recommend this method most for travel, especially since Taoyuan Airport has 14 Taiwan Bank branches.

The fourth is foreign currency ATMs. Use a chip-enabled debit card to withdraw 24/7, with a cross-bank fee of only NT$5, directly deducted from your NT account. E.SUN Bank’s foreign currency ATMs also have a daily limit of NT$150k. The downside is limited locations (about 200 nationwide), and cash may run out during peak times. The cost is roughly NT$800–NT$1,200.

In summary, if your budget is NT$50,000 to NT$200k, I especially recommend a mixed approach—online settlement combined with foreign currency ATMs—enjoying favorable rates with flexibility.

Is it a good time to exchange for yen now? My answer is “Yes, but in batches.” Last year’s end, the NT dollar to yen was 4.85, appreciating about 8.7% from the beginning of the year at 4.46. The forex gains from exchanging yen are already quite attractive. The Bank of Japan’s interest rate hike expectations are rising, and the US is entering a rate-cut cycle, all supporting the yen. But short-term fluctuations still exist, especially during arbitrage closing, which could see swings of 2–5%. So, staggered entry and avoiding all-in exchanges are key.

Don’t let your yen just sit idle after exchanging. Consider yen fixed deposits (annual interest rates of 1.5–1.8%), yen insurance policies (guaranteed rates of 2–3%), yen ETFs (like 00675U), or direct forex trading USD/JPY. While the yen is a safe-haven, it also moves bidirectionally, so choose based on your risk appetite.

To sum up, the yen is no longer just for travel pocket money but also a valuable asset for hedging and investment. Whether you’re preparing for a trip to Japan next year or want to leverage the NT dollar’s depreciation to allocate yen, following the “batch exchange, then stop” principle can minimize costs and maximize returns. Beginners can start with Taiwan Bank’s online settlement plus airport pickup or foreign currency ATMs, then transition into fixed deposits or ETFs as needed. This way, you not only enjoy cost-effective travel but also add a layer of protection during global market turbulence.