As you undoubtedly know, keeping your money in a regular savings account in a Japanese bank is as fiscally productive as stuffing it in your futon – or keeping it in your tansu (wardrobe), as the locals like to say. In fact, with interest rates near zero, you'd actually make more money keeping your money in your futon if the inflation rate was bigger than the interest rate, but with deflation as it is right now that isn't going to happen.
Zero inflation has been a fact of Japanese banking life for longer than I care to remember, and one of the alternatives is foreign currency savings accounts. Back in 2004 we stashed a couple of million yen we received after cashing in our miserable insurance policy from then defunct Chiyoda Seimei (lost on that one) into a Citibank savings account in Australian dollars. At the time the interest rate was 4 percent and the exchange rate was ¥82.14 to one Australia dollar. The maturation period was one year, but each month you could extract whatever interest you made that month and turn it back into yen. The sticking point is that the exchange rate was fluctuating, so if the Australian dollar went up, you could make a little money, but if it was going down, you might want to wait until it bounced back.
Well, we waited . . . and waited and waited. During most of 2004, the Aussie dollar fluctuated between ¥74 and ¥79. By the time the account matured in February 2005 it was back to about 81. With the loss in the exchange rate and the accumulated interest all factored in, when we converted the money in the account back to yen, we ended up with just a little more than what we started with. One reason is that you don't really get ¥81, because Citibank takes one yen on each Australian dollar as a handling fee.