Yuan’s Strength May Spur China Firms to Sell Billions of Dollars

China’s yuan is nearing key levels that may spur more local companies to convert their dollar holdings, analysts said.

Traders have reported more dollar sales in recent weeks, while data in July showed there was more demand to swap foreign currencies into yuan than buy them. If the onshore yuan breaks into the 7.0 to 7.10 range from its current 7.11 against a dollar, firms are likely to step up conversion, and up to $300 billion of foreign currency holdings may be unwound, according to a range of estimates by Barclays Bank Plc. and Dongwu Securities.