China's yuan remained largely steady against the US dollar on Monday as increased seasonal foreign exchange settlements by Chinese companies helped offset strength in the greenback following stronger-than-expected US jobs data.

The dollar gained support after US employment growth accelerated in October and the unemployment rate declined, signalling a potential improvement in the labour market after a slowdown in mid-summer. The data reinforced expectations that the Federal Reserve could raise interest rates in December.

The onshore yuan edged up 0.03% to 6.6746 per dollar as of 0255 GMT, while the offshore yuan was largely unchanged at 6.6726.

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According to Reuters, Chinese companies have been taking advantage of a recent pullback in the yuan to accelerate their year-end dollar sales. The trend follows Beijing's decision last week to increase the foreign exchange reserve requirement for financial institutions, a move markets interpreted as an attempt to moderate the yuan's appreciation.

Chinese exporters typically convert a larger portion of their foreign currency earnings into yuan towards the end of the year and ahead of the Lunar New Year. These conversions are driven by accounting and administrative requirements, as well as seasonal demand for cash to finance employee bonuses and holiday-related expenses. The resulting increase in foreign exchange settlements generally supports the yuan in December and January.

Before the market opened, the People's Bank of China (PBOC) set the yuan's daily midpoint rate at 6.7188 per dollar, its weakest level since October 22. The fixing was 389 pips weaker than a Reuters estimate.

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The onshore yuan is permitted to trade within a 2% range on either side of the official midpoint each day.

Meanwhile, the CFETS yuan basket index, which tracks the Chinese currency against a basket of trading partners' currencies, climbed to a fresh 52-month high of 103.98 based on Monday's official fixing. Reuters calculations using official data showed that the index had gained more than 6% so far this year.

The yuan showed little reaction to China's latest inflation figures, which indicated that producer inflation accelerated to its fastest pace in nearly four-and-a-half years, while consumer inflation moderated in the previous month.

The data highlighted persistent cost pressures from higher oil prices despite subdued domestic demand.

Analysts at Societe Generale said Beijing's decision to raise the foreign exchange reserve requirement was aimed at curbing rapid yuan appreciation. They maintained that Chinese policymakers favour a gradual and measured strengthening of the currency to avoid intensifying domestic deflationary pressures.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)