Forex regulator dismisses hot money inflow concerns

Foreign exchange supply and demand in China is "generally balanced" and expectations about China's currency remain "basically stable" despite hot money inflow concerns, the industry regulator said Wednesday.

The foreign exchange watchdog made the comments after the spot price of the yuan against the U.S. dollar rose by the 1-percent daily limit for ten consecutive days from late October into November.

This reignited concerns over hot money inflows into the world's second-largest economy. Hot money, or speculative capital flows, can potentially lead to market instability.

"There is no strong evidence of hot money inflows in China despite a recent rally in the yuan, which has been driven by improved market sentiment," the State Administration of Foreign Exchange said in a statement.

The prospects for the country's economy and currency is one of optimism due to both domestic and external factors, leading to a stronger yuan, the statement said.

The spot price of the yuan against the U.S. dollar rose to 6.2262 on Nov. 13, marking a record high since China's foreign exchange reforms seven years ago.