Jan. 29 (Bloomberg) -- Treasuries may rise in Asia after the dollar fall against the yen, spurring expectations the Bank of Japan may sell its currency and buy U.S. debt with the proceeds.

The 4 1/4 percent Treasury due in November 2013 rose 2/32, or 63 cents per $1,000 face amount, to 100 17/32 at 11:05 a.m. in Tokyo. The yield fell 1 basis point to 4.18 percent. A basis point is 0.01 percentage point.

The Bank of Japan sold its currency yesterday after the dollar weakened, said traders who deal with the central bank and asked not be identified. Yen sales by the central bank spur expectations it will buy Treasuries, said strategists such as Freddy Lim at Lehman Brothers Japan Inc.

``There's probably going to be some Treasuries buying after the Bank of Japan intervened'' Tokyo-based Lim said. Lehman Brothers Inc. is one of the 23 primary U.S. government securities dealers that trade directly with the Federal Reserve Bank of New York.

The 1 7/8 percent note maturing in December 2005, among the securities most sensitive to interest-rate expectations, rose 1/32 to 100 1/8, with the yield falling 2 basis points to 1.79 percent. The yield yesterday climbed the most since June. The Treasury will sell new two-year notes today. The notes yielded 1.85 percent in pre-auction trading.

The two-year note yield yesterday surged 17 basis points after the Fed dropped a phrase saying was going to keep the target rate on overnight loans at 1 percent for a ``considerable period.''

Policy makers said they would be ``patient'' in keeping down borrowing costs.

Last Updated: January 28, 2004 21:18 EST