CREDIT demand continued to rise in April, heightening the risk that rates may be increased if the pound falls further. Annualised credit demand rose by 19 per cent in April from 18.6 per cent in March, partly because of increased borrowing by speculators who were shorting" the currency.

In Dublin official figures from the Central Bank released yesterday showed that demand for mortgaged. finance remained flat at 14.3 per cent. Mr Dermot O'Brien, chief economist at NCB Stockbrokers, said mortgage demand had really been pretty static since last August, albeit at high levels.

Mr Oliver Mangan, chief economist at AIB Capital Markets, said the foreign exchange developments had less impact than imagined. He. added that non mortgage credit has continued to accelerate to 22 per cent from 20.7 per cent in March and 17.4 per cent in February.

Conditions in the interest rate markets remained easy yesterday but Mr Mangan said this might change next week.

However, Mr O'Brien said the Bank was aware that a rate hike would do nothing to stop speculation on the currency. "When the market has a very strong view, a rate rise is ineffective. The last rise was a gesture of protest; it was simply letting the market know that the pound was not a pure one way bet.

The Central Bank release also confirmed the size of its intervention in April at an underlying £1.3 billion.

At the same time, the markets were quiet. The pound closed at 90.90p against sterling in late trade from 91.31p on Wednesday and at DM2.5698 from DM2.5694 a day earlier. The markets are now looking ahead to US jobless figures and the Bank of England meeting today.. which could have short term implications for the currency and interest rate markets.

Analysts are divided over whether or not the new Bank of England panel will raise rates. According to Mr Mangan, a rate rise could put further pressure on the pound and push it towards 90p.

Mr O'Brien added that a fall through 90p and further credit growth could lead to a rate rise.

. Meanwhile, doubts are growing in Chancellor Kohl's coalition partner, the Bavarian Christian Social Union (CSU), that the European Union's planned single currency will be launched on time in 1999.

The Sueddeutsche Zeitung quoted a member of the CSU state government in Bavaria as saying: "Since the French election we have agreed currency union must be postponed." However, Finance Minister Mr Theo Waigel insisted there was no discussion in the CSU about a possible delay.