Foreign Exchange Guide to Japan
In this guide we review :
- Japanese yen info - general info about the Japanese yen
- Japanese yen in the markets - recent JPY moves and predictions from the FX markets
- Travelling in Japan - currency & money saving tips
- Buying Japanese yen cash online - travel money for Japan
- Sending money to Japan - save on Japanese yen bank transfers to Japan
- Japanese yen exchange rates - latest info & charts.
Japanese yen (JPY) general currency information
According to the Bank for International Settlements, in 2016, trading in the Japanese yen (ISO: JPY) contributed to 22% of total foreign exchange market turnover, making the yen the world’s third most traded currency.
Like government bonds and gold, the Japanese yen is considered a safe haven asset – it is the premier safe haven of the currency world. This means that the yen is likely to increase in value against other currencies during periods of economic uncertainty or when global geopolitical risk is elevated, or during bouts of high market volatility.
Since 1995, against the US dollar, the yen’s lowest valuation came in August 1998 when USD/JPY reached 147.67 (¥100 cost a little less than $0.68). Its post-1995 high came in October 2011 when USD/JPY traded at just 75.56 (¥100 cost $1.32).
The Japanese yen is a crucial part of the ‘carry trade’ – a popular strategy among foreign exchange traders in which they borrow in a currency with a low interest rate and use those funds to invest in currencies paying a higher rate. In recent decades, the most popular way to fund the carry trade has been to borrow (sell) yen due to Japan’s consistently low interest rates (since 1996 Japanese rates have averaged less than 0.5%).
Japanese yen (JPY) in the markets
The Japanese yen spent eleven of 2017’s twelve months trading up and down between 108 and 115 per US dollar. Volatility in USD/JPY was low relative to recent years and yen traders will be hoping for more activity and a sustained trend in 2018.
In 2018, a break above 115 is more likely than one below 108, according to UBS. The Swiss bank believes that October’s re-election of Shinzo Abe as Japanese Prime Minister makes it probable that the Bank of Japan maintains loose monetary policy in the coming year. Coupled with a Federal Reserve that is expected to hike US interest rates twice in 2018, and you’re left with only one possible conclusion, says UBS: a higher USD/JPY rate.
In late December ’17, the yen fell to a twenty-six-month low against the euro (a EUR/JPY high). EUR/JPY came within a whisker of 135.
Like the Federal Reserve, the European Central Bank is expected to tighten monetary conditions in 2018 (via a tapering of its bond-buying program) and this makes it likely that the yen continues to lose value against the euro.
One obvious caveat to yen weakness is North Korea. Due to the yen's status as a safe haven, weakness in the currency will be limited by any serious escalation in US-North Korea tensions.
Japan currency and money saving tips
Though very expensive, Japan is one of the most amazing, beautiful, and friendly countries in the world. Japan is a high-tech world mixed with the politeness and respect of their past. It has all the benefits of a high tech country mixed with a lovely sense of the old. Japan has fantastic food, beautiful temples and shrines, zen gardens, national parks, and a culture with a long and rich history. It’s a wonderful place and, while it may be an expensive country to visit. Most people can speak English and are willing to do so. Accommodation can be expensive, especially in Tokyo, but with a little looking around on the internet you can find some amazing deals. Food options cater to all, you can both go expensive or cheap, and neither is hard to find.
The easiest way to travel in Japan is by train, bullet trains can be expensive but are astoundingly fast and comfortable. Most of the city metro tickets cost 125-250 JPY for a single journey. In most major cities, you can buy a day pass, which gives you unlimited travel for 24 hours for around 1,000 JPY on select trains. Inter-city bus tickets cost around 2,500 JPY. For budget travelers the bus is an option, they are far cheaper but can take up to five times the amount of time to get to your destination. Most temples and museums are free to enter, although some popular attractions cost around 1,250 JPY. The temples in Kyoto can cost up to 620 JPY. Many of the city’s parks are free, so take advantage when you can and spend the day there. The same for Tokyo, don't be afraid to get a decent map and wander around.
Japan Trip Checklist
Travel money for Japan
Save money and time by Ordering your Japanese yen online from Travelex, you get better rates and can pick up the JPY cash locally or even on travel day at the airport.
Another popular option is to use a Pre-paid Travel Card. Your Debit/Credit Card provider will charge you 2% from market mid-rate, but your bank may also charge an extra 3% as an “Overseas Transaction Charge” plus “Overseas ATM” fees for withdrawing cash.
For card purchases if offered a choice of currencies always select to Pay in Japanese yen otherwise you may get much worst exchange rates.
Sending money to Japan
When sending money to Japan it’s important to compare your bank’s rates & fees with those we have negotiated with our partner money transfer providers. To get a better deal you should follow these 3 simple steps :
- Open an account with a BER reviewed FX provider (id docs may be required)
- You specify the local or Japanese yen amount you want to transfer
- Make a local currency domestic transfer for the requested amount to the provider's bank account in your country
- Once your funds are received by the provider the converted JPY amount will be transfered to the recipient account you specify in Japan.
By comparing the rates of FX specialist providers rates versus your bank's standard rates you can hopefully save around 5% and maybe more - end result is more Japanese yen deposited into the recipient bank account in Japan and less margins and fees kept by the banks!