"Since September, foreign exchange reserves have actually showed a daily increase," she told reporters. China tightened its foreign exchange controls in September, insisting on more documentation and stricter approvals, in a move to halt capital flight and protect the local currency, the yuan.

That reversed a lengthy stagnation as reserves had held fairly steady around the $139.9 billion level reached at the end of last year despite a steady influx of foreign investment and a healthy trade surplus.

"Based on the international payment situation and the trade position, an increase to $150 billion in foreign exchange reserves should be no problem," she said. "But earlier this year, there waslittle change (in reserves) because of illegal losses of foreign currency."

Reserves reached $143.7 billion by the end of October. Wu said several hundred million dollars worth of local currency held by the public had been converted into foreign exchange because of fears of a devaluation.

China has repeatedly pledged not to devalue the yuan and it has seen a strong reserves position as critical to its effort to keep the currency stable in the face of Asia's financial crisis.

Wu, who took up her post as head of the newly created Shanghai regional branch of the central bank last month, is the former head of the state administration of foreign exchange, the agency that oversees foreign currency regulations.

She said local companies had benefited greatly from the nation's ability to resist pressure for a devaluation.

Many companies have complained of long delays and even lack of access to foreign exchange for legitimate purposes due to the curbs imposed in September.

"Complicated procedures arepreferable to a big devaluation of the yuan and financial market instability," she said, adding that she believed procedures would be smoother in coming months.

The central banker also said that Shanghai, the nation's commercial centre, had its share of foreign exchange scams, as authorities had uncovered some $425 million in fraudulent purchases of foreign currency in recent months.

Ten financial institutions were involved, she said, without identifying them.

Shanghai had a better record in policing its finance sector as bad debts of its banks were well below the national level of 25 per cent of outstanding loans, Wu said.