SPAIN RAISES CALL MONEY RATES ON HIGHER DEMAND

  The Bank of Spain raised overnight call
  money rates by 1/4 to 14 pct on demand for 746 billion pesetas
  in today's auction, which a bank spokesman termed "heavy."
      Rates stood at 12.1 pct at the start of the year and have
  been increased to drain liquidity on rising demands for funds,
  the spokesman said.
      He said in reply to Reuters inquiries that rates could rise
  further if money supply growth rose above this year's eight pct
  target for M-4, defined as liquid assets in public hands.
      Money supply rose at an annualised rate of 16.7 pct last
  month against 8.1 pct in January. Growth was 11.4 pct in 1986.
      A leading Spanish broker said the central bank was applying
  a more restrictive policy to keep the lid on inflation.
      The consumer price index rose 8.3 pct last year.
      "Money supply control is the government's chief weapon
  against inflation," he said. "The problem is higher rates are
  attracting liquidity from abroad."
      He said this was why the central bank enacted specific
  measures to control the inflow of foreign capital. The Bank of
  Spain earlier this month imposed a 19 pct reserve requirement
  on new convertible peseta funds held by banks to curb
  short-term speculative capital from abroad.
  

