The yen is strengthening sharply against the dollar in Tokyo on expectations the US central bank may implement interest rate cuts next year.

The Japanese currency surged to the upper 140-yen level at one stage on Thursday for the first time since July. That's up by more than 4 yen from Wednesday.

The appreciation came after the Federal Reserve hinted at cutting rates at least three times in 2024.

Remarks by Chair Jerome Powell after the Fed's policy meeting also helped boost expectations for rate cuts, prompting investors to sell dollars and buy yen.

Analysts say the Fed policymakers were far more dovish than had been anticipated, surprising investors.

They say market players are buying the Japanese currency as a drop in US long-term rates is narrowing the rate gap between the two countries.