The yen surged more than one percent against the dollar on Thursday after comments from the head of the Bank of Japan that stoked expectations it will tighten its ultra-loose monetary policy.

Governor Kazuo Ueda said handling monetary policy "will become even more challenging from the year-end and heading into next year", Bloomberg News reported. The unit strengthened to 145.63 per dollar in the afternoon, from about 147.35 late Wednesday.