TOKYO (AFX-ASIA) - The yen extended its decline in midafternoon trading after Finance Minister Masajuro Shiokawa in effect urged the Bank of Japan to further ease monetary policy, dealers said. Shiokawa said the government hopes the BoJ will increase the level of current accounts held at the bank towards the year-end to beyond the 14 trln yen seen in November. "I have been pressing for (BoJ) governor (Masaru) Hayami to provide ample liquidity," Shiokawa said, adding, however, that the bank must make the decision. "Fund demand will increase towards the year-end, so I hope the BoJ will increase current-account levels to beyond the 14 trln yen seen in November." BNP Paribas foreign exchange general manager Takashi Nakata said talk on the possible launch of foreign bond purchases by the BoJ was also seen to continue to undermine sentiment towards the yen, although he added that such a measure is not likely to be adopted at the forthcoming policy board meeting. BoJ governor Hayami last week said it would be very difficult for the bank to buy foreign bonds to further ease policy, as has been speculated. The underlying concerns over the strong credit risk in Japan and the future trend of the Japanese economy will also weigh on the yen, dealers said. The Cabinet Office is expected to release Japan's year to March 2003 economic outlook tomorrow. "Due to a lack of encouraging leads to buy into the yen, players are now rushing to unwind hedge positions and buy counterpart currencies," Nakata said. "However, the dollar may take some time before reaching the 130 yen level due to relatively heavy sell orders lined up above the 129.00 yen level." The yen was lower against the euro due to economic and financial problems in Japan and a change in sentiment towards the European currency, dealers said. "The yen also failed to protect a key support line at the 115.00 yen level, which appears to have opened a way down towards 116.50 yen," Nakata said. The euro was rangebound against the dollar due to a lack of fresh leads, with investors also reducing their positions ahead of the Christmas holiday break, dealers said. "But, if the euro is able to protect the lower-end of the 0.89 usd level, it can maintain the underlying rising trend against the dollar," Nakata said.