Is it worth exchanging Japanese Yen for US Dollars? The Complete Guide to the 2026 Japanese Yen to US Dollar Exchange Strategy

The topic of exchanging TWD for USD has become increasingly popular recently. With the Bank of Japan’s policy adjustments and global interest rate differentials changing, many Taiwanese investors are considering: Should they hold both JPY and USD simultaneously? When is the best time to exchange for the most value? This article will compare the investment attributes of JPY and USD to help you find the most suitable exchange strategy.

JPY and USD: Why do investors hold both?

In the global forex market, the yen and the dollar each have unique investment values. Unlike exchanging currency solely for travel, modern investors need to understand the strategic roles of these two currencies.

The hedging properties of JPY

The yen has long been considered one of the world’s three major safe-haven currencies (alongside USD and Swiss Franc). This is no coincidence. Japan’s economy is stable, debt is manageable, and during market volatility, funds often flow into the yen. During the Russia-Ukraine conflict in 2022, the yen appreciated 8% in a week, successfully buffering a 10% decline in the stock market. For Taiwanese investors, holding a moderate amount of JPY not only hedges against Taiwanese stock risks but also provides an additional layer of asset protection.

If you hold Taiwanese stocks and are concerned about systemic risks, JPY is a relatively stable hedging tool.

The yield characteristics of USD

In contrast, the USD represents the credit and liquidity of the world’s largest economy. The US Federal Funds Rate (recently around 5.25-5.5%) is much higher than Japan’s (0.75%), making USD a more attractive “financing currency.” Many arbitrage traders borrow at low interest in JPY and convert to high-yield USD for investment—this US-Japan interest rate differential strategy (close to 4.0%) is widely used among global hedge funds.

Therefore, if your investment goal is to pursue stable returns, USD savings or USD asset allocation is the top choice.

Comparing the investment values of JPY and USD

Let’s look at specific data to compare these two currencies:

Hedging value dimension: JPY has a clear advantage. During geopolitical tensions (Taiwan Strait, Middle East conflicts), funds flow into the yen, pushing its exchange rate higher; while USD, though safe, exhibits larger volatility.

Yield dimension: USD is superior. The US Federal Funds Rate at 5.25-5.5% far exceeds Japan’s 0.75%. Japanese savings deposit rates are about 1.5-1.8%, whereas USD deposits can reach 2.5-3.0%.

Policy direction: The Bank of Japan has just started a rate hike cycle (currently 0.75%, a 30-year high), with further room for increases; the US is entering a rate cut cycle, so USD interest rates may decline in the future.

Exchange rate trend: The yen has further appreciation potential driven by rate hike expectations; the USD may face short-term pressure due to rate cut expectations.

Investment conclusion: Long-term, JPY is suitable for risk hedging positions (10-15% of assets), while USD is suitable for income and liquidity positions (40-50%). Combining both can create a more balanced forex allocation.

Why now is a good time to allocate JPY and USD

Recent key changes in the forex market warrant investor attention:

BOJ’s policy shift: BOJ Governor Ueda Kazuo has recently signaled a hawkish stance, with market expectations of an over 80% chance of rate hikes. If the BOJ raises rates to 0.75% (a 30-year high) mid-month, Japanese bond yields will continue rising (already at a 17-year high of 1.93%), supporting the yen’s medium-term appreciation.

USD exchange rate adjustment space: USD/JPY has fallen from a high of 160 at the start of the year to around 154-156. Based on long-term trend analysis, the yen could strengthen further below 150 under continued rate hike support—offering forex gains for those converting into JPY.

The reality of TWD depreciation: Instead of holding a depreciating TWD, diversifying into JPY (hedging) and USD (income) makes sense. Taiwanese investors’ forex demand has increased by 25% in the second half of the year, reflecting a broader awareness of this strategy.

The most efficient channels for exchanging JPY and USD in Taiwan

Once you’ve decided to exchange for JPY or USD, the next question is: which method saves the most money?

1. In-person cash exchange (traditional but costly)

Bring TWD cash to a bank or airport to exchange for JPY cash. This is the safest and most direct method but also the most expensive.

Banks use “cash selling rates” (1-2% worse than spot rates), plus possible service fees, resulting in a loss of NT$1,500-2,000 on NT$50,000. Suitable for: seniors, those unfamiliar with online platforms, or urgent needs.

Recent bank rates in Taiwan show cash selling rates at about 98-99% of the current spot, making this the least favorable among four options.

2. Online forex exchange + foreign currency account withdrawal

Use bank apps or online banking to convert TWD at the “spot selling rate” (about 1% better than cash rates) into JPY or USD, deposited into a foreign currency account. If cash withdrawal is needed, do so at a later time via counter or foreign currency ATM.

Advantages: Better rates, 24-hour operation, ability to stagger entries for average cost. Suitable for experienced forex investors with foreign currency accounts.

Cost: NT$50,000 loss of NT$500-1,000. After conversion, you can deposit into Japanese yen or USD fixed deposits (interest rates 1.5-1.8% and 2.5-3.0%, respectively), letting your money work for you.

3. Online currency exchange + airport pickup (most recommended)

No need for a foreign currency account—simply book online via bank websites, specify airport branch pickup. Taiwan Bank’s “Easy Purchase” online exchange is completely fee-free (pay via TaiwanPay with only NT$10 fee), with about 0.5% better rates.

This is the most elegant option before traveling. Taoyuan Airport has 14 Taiwan Bank branches (2 open 24 hours). Book 1-3 days in advance, and on departure day, pick up JPY or USD cash directly—no need to exchange for physical cash separately.

Cost: NT$50,000 loss of NT$300-800. This is the lowest-cost cash option, ideal for planned travelers or small-scale investors.

4. Foreign currency ATM withdrawal 24/7

Use chip-enabled bank cards at foreign currency ATMs to withdraw JPY or USD cash instantly. Cross-bank fee is only NT$5 (compared to NT$100-200 at counters), with daily withdrawal limits of NT$150,000-200,000 (depending on bank).

Advantages: Emergency use, 24/7 operation, low cost. Suitable for those needing flexible timing without visiting counters.

Disadvantages: Limited ATM locations (~200 nationwide), peak times may run out of cash. By end of 2025, Japan ATM withdrawal services will require international cards (Mastercard/Cirrus).

Cost: NT$50,000 loss of NT$800-1,200. Due to fixed denominations (1,000, 5,000, 10,000 yen or USD), larger amounts require multiple transactions.

Four main exchange methods cost comparison

Summary: If you have 3-7 days, online exchange is most cost-effective; for urgent needs, ATMs are next; for long-term investment, online accounts offer maximum flexibility.

Forex trading and allocation strategies for JPY and USD

After exchanging into JPY and USD, how to make this money grow?

Option 1: JPY-USD fixed deposit portfolio

JPY fixed deposit: Open foreign currency accounts at banks like E.SUN or Bank of Taiwan, with minimum NT$10,000 (about 1 million JPY), annual interest 1.5-1.8%. Very low risk, suitable for conservative investors.

USD fixed deposit: Annual interest 2.5-3.0%, offering better returns than JPY. Ideal for steady cash flow.

Strategy: Allocate half the funds to USD fixed deposits (main income source), and half to JPY fixed deposits (risk hedge).

Option 2: JPY-USD forex trading (advanced)

To capture USD/JPY fluctuations, trade directly on platforms like Mitrade. Supports USD/JPY and EUR/JPY trading.

Advantages:

• Zero commission, low spreads, 24-hour global market access
• Long and short positions, profit from both rising and falling markets
• Risk management tools like stop-loss, take-profit
• Leverage available, small capital can control large positions

Risks: 2-5% short-term volatility, requires technical skills and risk awareness.

Suitable for: Investors with forex experience and risk tolerance.

Option 3: JPY-USD ETF portfolios

JPY ETFs (e.g., Yuanta 00675U, 00703): Track yen indices, can be bought as fractional shares via broker apps. Low expense ratios (~0.4%), suitable for dollar-cost averaging.

USD ETFs: Track dollar indices or US bonds, similar fee structure.

Strategy: Monthly fixed investments in JPY and USD ETFs to build long-term assets, avoiding timing risks.

Common questions about JPY and USD exchange

Q. How does yen appreciation affect Taiwanese investors?

A. Positive: If you already hold JPY, appreciation increases asset value. For example, from 154 to 150 (2.6% appreciation), NT$50,000 in JPY assets gains about NT$1,300.

Negative: If planning to spend in Japan, higher yen costs more. But from an investment perspective, yen appreciation is a positive signal.

Q. Is it too expensive to buy USD now?

A. USD faces downward pressure due to rate cut expectations, so short-term may weaken. But long-term, USD interest rates (2.5-3%) still far outperform TWD deposits (0.8-1.2%), making USD worth holding. Gradual entry is more practical than waiting for further declines.

Q. How should I allocate between JPY and USD?

A. Based on investment goals:

• Conservative: 60% JPY (hedging) + 40% USD (income)
• Balanced: 45% JPY + 55% USD
• Growth: 30% JPY + 70% USD (via forex trading or stocks)

Q. After exchanging into JPY and USD, what next?

A. Don’t let your money sit idle. Immediately consider further allocation:

1. Short-term (1-3 months): Fixed deposits for steady interest
2. Mid-term (3-12 months): ETFs or insurance products targeting 3-4% annual yield
3. Long-term (over 1 year): Currency hedging or forex trading strategies

Summary: Optimal strategies for JPY and USD

Core logic: JPY is insurance; USD is cash flow.

Whether for travel, investment, or asset allocation, there is no absolute answer—key is understanding your goals, staggering operations, and not leaving money idle after exchange.

Practical tips:

1. Define your allocation goal: Hedging (mainly JPY) or income (mainly USD)?
2. Choose the best exchange channel: If time permits, online exchange saves money; for urgent needs, ATMs are convenient.
3. Immediately deploy after exchange: Convert JPY into fixed deposits or ETFs; invest USD into stocks or high-yield accounts.
4. Monitor central bank policies: Continued BOJ rate hikes support the yen; US rate cuts may weaken USD—adjust your allocations accordingly.

This way, you can enjoy more cost-effective travel in Japan and better protection against market fluctuations globally. Combining JPY and USD is the smart choice for modern investors.