Investing in Record-High Yen: Essential Strategies [Rising Yen③]

# Yen Rises as Safe-Haven Currency Amid Shifts in Trade Policies Recent changes in U.S. tariff policies have led to declining demand for the dollar, elevating the Japanese yen as a favored safe-haven asset among investors. With escalating global financial market volatility driven by trade tensions, along with anticipated economic recovery and possible interest rate hikes in Japan, many analysts predict sustained yen strength. ## Growing Interest in Yen-Denominated Savings and ETFs Reports on the 27th from the financial sector highlight increasing investor interest in yen-denominated savings accounts and yen-exposed exchange-traded funds (ETFs). Investors who benefited from last year’s weaker yen, trading in the 800–900 won range per 100 yen, are now realizing profits as the exchange rate exceeds 1,000 won. As of the 24th, yen deposit balances across Korea's top five banks—KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup—totaled 867.3 billion yen, down 59.3 billion yen from 926.6 billion yen at the end of the previous month. In won terms, this decrease equals 600 billion won. The yen’s appreciation has led to a steady decline in yen deposit balances, with a notable reduction lately. Compared to the over 1 trillion yen at the end of last year, the balances have dropped by 152.7 billion yen (15 trillion won), now resting in the mid-800 billion yen level. ## Banks Launch Competitive Forex Products Forex deposit accounts offer significant perks, such as preferential exchange rates during transactions. Travel cards linked to these accounts are also becoming popular for their ease in currency conversion and overseas spending. Hana Bank’s "Million Dollar Account" supports deposits in up to 10 currencies out of 28. For online transactions, the bank provides year-end exchange rate discounts: 50% for yen and euros, and 80% for U.S. dollars. Interest accrues on these deposits based on currency type. Hana Card’s "Travelog" card uses the bank’s exchange rate for won-to-foreign currency conversions. Reverting to won incurs a 1% fee, but the card remains favored for its convenience. Woori Bank’s "FX Care Deposit" adjusts foreign currency purchase amounts based on exchange rate changes, offering preferential rates—80% for automated purchases and 50% for regular transactions. Cash withdrawal fees are waived for month-long deposits, with an additional fee exemption up to $2,000 annually. NH NongHyup Bank offers the "Travelry Deposit" with 100% preferential rates for converting won to foreign currency and 50% for withdrawals. Despite a low dollar-denominated interest rate of 0.01%, the Travelry Check Card waives international brand fees and ATM withdrawal fees for up to 10 transactions monthly. Shinhan Bank’s "FX Change-Up" account provides up to a 50% exchange rate discount, while its "SOL Travel Check Card" offers a 100% discount on won-to-foreign currency conversions and a 50% discount for conversions back to won. KB Kookmin Bank provides up to a 90% discount for major currency exchanges conducted online. ## Speculation Drives Yen Appreciation The U.S. Commodity Futures Trading Commission's (CFTC) data reveal that speculative long positions on the yen have hit record highs, indicating increased investor sentiment for further dollar weakness and yen strength. This trend suggests investors are increasingly viewing the yen as a viable long-term appreciation bet. Goldman Sachs has highlighted the yen’s unique position as the optimal hedge against U.S. recession risks and trade policy uncertainties. ## Yen-Exposed ETFs Show Strong Gains ETFs associated with the yen have posted impressive returns, bolstered by the currency’s appreciation and ensuing exchange rate gains. According to the Korea Exchange, Hanwha Asset Management’s "PLUS Japan Yen Ultra-Short-Term Treasury Bond (Synthetic)" ETF achieved an 8.83% return in the past three months. Similarly, yen-exposed ETFs like KB Asset Management’s "RISE U.S. 30-Year Treasury Yen-Exposed (Synthetic-H)" and Korea Investment Management’s "ACE U.S. 30-Year Treasury Yen-Exposed Active (H)" recorded returns of 8.66% and 8.19%, respectively. With the yen's rising prominence as a safe-haven currency, markets are closely watching how investors respond to global uncertainties and whether the yen's robust performance will continue in the coming months.