Japanese Yen Allocation Strategy Amid NT Dollar Depreciation: The Complete Guide from Exchange to Fixed Deposits

By the end of 2025, the Taiwan dollar has risen to a high of 4.85 against the Japanese yen. This not only indicates increased costs for traveling abroad but also reflects a shift in the global financial landscape. When the Taiwan dollar faces depreciation pressure, more investors are considering: not just exchanging yen for travel, but also for asset hedging. This article delves into each aspect of yen allocation, from choosing exchange channels and judging exchange rate trends to foreign currency fixed deposits after exchange, helping you build the lowest-cost, highest-yield yen portfolio.

Why is it important to pay attention to the yen now?

The importance of the yen is not just due to the popularity of travel to Japan. From a macro perspective, the yen is one of the three major safe-haven currencies alongside the US dollar and Swiss franc. During the Russia-Ukraine conflict in 2022, the yen appreciated by 8% in one week, offsetting a 10% decline in global stock markets. This protective power is especially critical for Taiwanese investors.

Currently, the US is entering a rate-cut cycle, while the Bank of Japan is raising rates in the opposite direction. Recent hawkish comments from the BOJ governor have pushed market expectations of rate hikes to 80%, with a projected increase of 0.25 basis points to 0.75% at the December 19 meeting (a 30-year high). Japanese government bond yields have reached a 17-year high of 1.93%. This means that exchanging for yen is not only a hedge against Taiwan stock volatility but also a way to lock in stable returns through foreign currency fixed deposits or yen insurance policies.

According to the latest market observations, Taiwan’s foreign exchange demand in the second half of 2025 has increased by 25%, with yen accounting for over 40%. The main drivers are the recovery of travel and increased hedging needs. Compared to the beginning of the year at 4.46, the yen has appreciated by 8.7% so far, making the exchange gains for Taiwanese investors quite substantial.

Comprehensive evaluation of five exchange channels

Many believe that exchanging yen only requires a visit to the bank, but in reality, just the exchange rate difference can cause costs to vary by 30-40%. Below are detailed pros and cons of each channel:

Channel 1: Traditional counter exchange—convenient but costly

Carry Taiwan dollar cash to a bank branch or airport counter to exchange for yen cash. Banks use the “cash selling rate,” which is about 1-2% worse than the spot market rate. For example, Taiwan Bank’s rate as of December 10, 2025, is 0.2060 (1 TWD = 4.85 yen). Some banks charge an additional handling fee of NT$100-200.

Estimating with NT$50,000, this method results in a loss of about NT$1,500-2,000. Suitable for small, urgent cash needs or travelers in a hurry at the airport.

Channel 2: Online transfer combined with foreign currency ATM—most flexible

Use bank app to convert TWD into yen and deposit into a foreign currency account, enjoying an “at-market” selling rate about 1% better than cash exchange. If cash is needed, use bank foreign currency ATMs, deducting directly from TWD account, with only NT$5 cross-bank fee.

Fubon Bank’s foreign currency ATMs support 24-hour withdrawals, with a daily limit of NT$150,000, and no additional currency exchange fee. About 200 foreign currency ATMs nationwide offer yen, USD, and other major currencies. For NT$50,000, this method costs about NT$800-1,200 in losses, suitable for temporary needs and readers who cannot visit the counter.

Reminder: Foreign currency ATM withdrawals have fixed denominations (1,000, 5,000, 10,000 yen). During peak times (e.g., Taoyuan Airport), cash may run out quickly. Planning ahead or spreading out withdrawals is recommended.

Channel 3: Online currency exchange + airport pickup—best for pre-trip planning

No need to open a foreign currency account in advance. Fill in currency, amount, pickup branch, and date on the bank’s website. After completing the online exchange, bring ID and transaction notification to the designated branch to pick up cash. Taiwan Bank’s “Easy Purchase” offers about 0.5% rate discount, with a handling fee of NT$10 (if paid via Taiwan Pay) or free. You can reserve pickup at 14 locations at Taoyuan Airport (including 2 open 24 hours).

Cost loss is about NT$300-800. Ideal for well-planned travelers who want to pick up cash at the airport on the day before or the day of departure. Note that reservations take 1-3 days, and pickup times are limited by bank hours.

Channel 4: High-volume exchange with foreign currency account—investment-oriented

For exchanges over NT$200,000, it’s recommended to open a foreign currency account first to enjoy better rates (close to international market prices), then execute batch operations based on rate trends. Banks like E.SUN, Taiwan Bank, and CTBC offer online account opening, with a minimum deposit of 10,000 yen and annual interest rates of 1.6-1.8%.

This method results in a cost loss of about NT$500-1,000 (for NT$500,000), suitable for those with forex investment experience planning to hold yen long-term.

Channel 5: International card withdrawal in Japan—reactive after arrival

When traveling in Japan, using Mastercard or international Visa cards at Japanese ATMs allows direct yen withdrawal at near-market rates. However, note that Japan’s ATM withdrawal services will be adjusted by the end of 2025, and some domestic banks’ international withdrawal functions may be affected. This method is suitable for emergency cash supplementation but not as the main exchange channel.

Cost comparison of four main options

Judging exchange rate trends and batch strategies

As of December 10, 2025, USD/JPY is about 154.58, down 5.42 points from the start of the year at 160. The BOJ is poised to raise rates, and short-term rates may fluctuate around 155, but the medium to long-term forecast is below 150.

For investors, it’s not advisable to exchange all at once. Instead, monitor three key points:

1. Recent support level: 155-156. If yen breaks above, consider adding more at lower prices.
2. Mid-term target: below 150 is a better entry point.
3. Risk warning: Arbitrage closing may cause 2-5% volatility; geopolitical conflicts (Taiwan Strait, Middle East) could also depress the yen.

Use the “333 batch method”: exchange 1/3 of funds above 155, another 1/3 between 154-155, and the last 1/3 below 150. This approach reduces average costs and hedges short-term fluctuations.

Post-exchange foreign currency fixed deposit tips

After exchanging yen, don’t let the funds sit idle without interest. The following four options suit different risk preferences:

Option 1: Yen fixed deposit—stable income

Open a bank foreign currency account and deposit yen online. Minimum NT$10,000 deposit, annual interest rate 1.5-1.8% (some banks offer up to 2%). For example, NT$1 million (about NT$200,000) in yen yields 15,000-20,000 yen annually.

Features: Risk-free, decent liquidity (early withdrawal may reduce interest), suitable for conservative investors.

Option 2: Yen insurance policy—medium-term appreciation

Purchase USD/JPY savings insurance from life insurance companies, with guaranteed interest rates of 2-3%, term of 5-10 years, with insurance coverage. Although the annual rate is slightly lower than fixed deposits, compound interest over 5+ years is significant.

Features: With protection, compound growth, suitable for family asset allocation.

Option 3: Yen ETFs—growth in waves

For example, Yuanta 00675U tracks the yen index, and fractional shares can be bought via brokerage apps for regular investment. Management fee is 0.4% annually. While slightly riskier than fixed deposits, ETFs have strong long-term appreciation potential. If the BOJ continues rate hikes and yen remains strong, ETFs can outperform fixed deposits significantly.

Features: Participate in yen appreciation, low management fee, convenient dollar-cost averaging.

Option 4: Forex swing trading—professional operation

Trade USD/JPY or EUR/JPY directly on forex platforms, capturing gains from rate fluctuations. Platforms like Mitrade offer zero commissions, low spreads, and 24-hour trading, with stop-loss and take-profit tools to manage risk.

Features: Long and short positions, leverage, suitable for experienced traders; highest risk.

Summary of foreign currency fixed deposit tips: Beginners are advised to combine “50% fixed deposit + 30% ETF + 20% active trading,” ensuring stable cash flow while participating in yen appreciation. If arbitrage opportunities (such as the US-Japan interest rate differential) exist, small forex trading attempts are possible but should not exceed 10% of total funds.

Quick FAQs

Q: How much is the difference between cash rate and spot rate?

Cash rate applies to physical cash transactions, typically 1-2% worse than the spot rate. Spot rate is for electronic transfers without physical cash, close to international market prices, about 0.8-1.2% better than cash rate. For example, exchanging NT$10,000 at a cash rate of 0.2060 yields about 48,300 yen; at the spot rate of 0.2070, about 48,700 yen—roughly NT$80 difference.

Q: How much yen can NT$10,000 buy?

Based on Taiwan Bank’s December 10, 2025, rate of 0.2060 (1 TWD = 4.85 yen), NT$10,000 can buy about 48,500 yen. Using the spot rate of 0.2070, it can buy about 48,700 yen. Actual amounts depend on the rate at withdrawal.

Q: Are there restrictions on large exchanges?

Post-2025 regulations, ATM withdrawals are capped at NT$100,000-150,000 per day depending on the bank. Counter exchanges over NT$100,000 require declaration of source of funds. It’s recommended to split withdrawals or use your bank card to avoid NT$5 per transaction cross-bank fees.

Q: What documents are needed for counter exchange?

Locals need ID card + passport; foreigners need passport + residence permit; companies need business registration. Minors under 20 require parental consent and ID. For online reservations, bring transaction notification.

Summary and action recommendations

Yen has long surpassed the “travel pocket money” role and has become an asset with hedging and appreciation value. Under the dual background of TWD depreciation and BOJ rate hikes, now is the window for yen allocation.

Core strategy: a “three-step” approach:

Step 1: Choose suitable exchange channels. For NT$50,000-200,000, recommend “online exchange + airport pickup” or “online transfer + ATM”; above NT$200,000, open a foreign currency account for better rates.

Step 2: Use batch entry to lower costs. Adopt the 333 batch method to diversify risk and capture entry points.

Step 3: Combine foreign currency fixed deposit techniques. After exchange, select fixed deposits, ETFs, or swing trading based on risk appetite, to generate annual yields of 1.5-3%.

Mastering this logic ensures that whether traveling to Japan next year or hedging assets, you can minimize costs and maximize returns on yen allocation.