* SAFE says falling dollar adds $80 billion to reserves in Q3
# Says Agbank IPO also helped to inflate reserves
* Says yuan expectations fuel capital inflows (Adds details, quotes)
BEIJING, Oct 14 (Reuters) - Currency changes and asset valuations contributed $80 billion to the sharp rise in China's foreign exchange reserves in the third quarter, China's foreign exchange regulator said on Thursday.
"Non-dollar currencies appreciated against the dollar in the third quarter with the euro in particular rising 11 percent against the dollar, and this has inflated China's reserves by more than $80 billion," the State Administration of Foreign Exchange (SAFE) said in a statement.
China's foreign exchange reserves, the world's biggest, increased by $194 billion from July to September, the most ever in a three-month period, to $2.65 trillion, indicating money was flowing into the country. [ID:nTOE69C062]
Money raised from an overseas share offerings by Chinese companies, mainly the $13 billion Hong Kong offering by the Agricultural Bank of China Ltd <1288.HK><601288.SS>, also inflated the hefty rise in reserves, the SAFE said.
Capital inflows were placing "relatively strong pressure" on
China, fuelled by expectations that the yuan
"China's macro-economic situation is stable with rosy growth prospects, and there are expectations for the yuan to appreciate."
In the face of speculators betting on yuan gains, the SAFE said China would try to improve the yuan exchange rate mechanism to block hot money inflows.
"In the long-term view, we will continuously improve the yuan exchange rate formation mechanism ... to provide no room for profiteering by speculators," it said, without elaborating.
On domestic issues in China, the regulator said China faced "difficult issues" managing inflationary expectations and preventing asset prices from rising too fast. (Reporting by Zhou Xin, Aileen Wang and Simon Rabinovitch; Editing by Chris Lewis)