TOKYO (AFX-ASIA) - The dollar eased against the yen in late morning on profit-taking but still with a bias to the dollar's upside due to economic disparities and possible more radical monetary easing by the Bank of Japan, dealers said. Japanese officials failed to suggest any verbal restraint on the dollar's rapid rise but rather further hinted at the possibility of foreign bond purchases by the central bank that would weaken the yen more, they noted. ABN Amro foreign exchange manager Toshihiko Masaki said the dollar has seen some quick profit-taking this morning with short-term investors nervous due to the over-extended dollar-long positions ahead of the year-end. "I think it's just a question of time before the 126.84 yen high for the year is breached, but at the same time the market position in dollars is pretty overbought," Masaki said. "The market will be worried about some profit-taking." However, he noted that despite this morning's sell off, the bias remains to the dollar's upside as short- and long-term investors seek to buy the US unit. "The price action shows that the market's still trying to buy on dips so unless we see a 3 yen correction to the 123 yen level, long-term and medium-term players will not liquidate their positions," he said. "After a small correction of 1.5 or 2 yen, the dollar will head higher, backed by yen-selling factors ... most importantly that authorities' are supporting these moves," Masaki said. "Some had expected comments aimed at slowing the rise." State Minister for Economic and Fiscal Policy Heizo Takenaka said this morning that the dollar's strength is based on expectations for positive economic fundamentals in the US. He added that he agrees that the US economy will recover in the short-term. Meanwhile, Takenaka said the BoJ should consider introducing more radical monetary policy, adding that it may be possible for the bank to buy foreign bonds to further ease monetary conditions. The move would also weaken the yen. "I am not in favour of introducing bias into the forex market -- though all monetary policies influence the market somewhat -- but I think it is possible to purchase foreign government bonds without providing such a bias," he said. "There is merit and demerit in inflation targeting," Takenaka added, saying: "It is necessary to take another step in considering the matter. We need to start open discussions right now."