China is considering changes to the way it calculates the yuan's daily reference rate against the dollar, a move that's likely to reduce exchange-rate volatility while undermining efforts to increase the role of market forces in Asia's largest economy.

Policy makers may add a “counter-cyclical factor” to the yuan's daily fixing, according to a government statement Friday, which confirmed an earlier report by Bloomberg News. Analysts said the change would give authorities more control over the fixing and restrain the influence of market pricing.

While a more tightly managed currency could provide China breathing room to push forward with a deleveraging campaign that's popular among foreign investors, it would mark a step back from President Xi Jinping's 2013 pledge to give markets a central role. The central bank's existing fixing system won international plaudits for being market-oriented and helped the yuan gain a spot in the IMF's basket of reserve currencies.