Forex regulator warns risks may rise

China's top foreign exchange regulator warned on Wednesday that systemic risk could possibly rise in the foreign exchange market due to unexpected fluctuations from irrational trading, as headwinds may get fiercer along with the deepened opening of financial sector.

As some developed economies gradually withdraw asset purchasing programs or quantitative easing policies, China's monetary authority should consider how to maintain a sound environment for trade and investment to prevent strikes from risk exposure, Lu Lei, deputy director of the State Administration of Foreign Exchange, said at a forum in Beijing.

He said that the foreign exchange reserve will remain a crucial tool to prevent irrational fluctuations, and hinted that there is no lower limit to the amount that should be held by the monetary authority.