European Central Bank Governing Council member Jaime Caruana said on Thursday that the central bank disliked brusque moves in foreign currency markets. "It is true that sudden movements, excessive volatilities in the foreign exchange market are not welcome," Caruana said in response to a question from the audience after giving a speech to the Spanish Confederation of Directors and Executives. "It is important that the foreign exchange markets adjust to economic fundamentals," he added. Caruana, who is also governor of the Bank of Spain, did not say whether he was referring to current foreign exchange rates. The euro rose to a record high against the dollar above $1.29 earlier this year but has since slipped by around 10 cents to trade at $1.1940 by 0900 GMT on Thursday.
The euro zone and the United States are two large, relatively closed economies and one would normally expect that there would be a some volatility in the exchange rate relationship between two such blocs, Caruana said. "What we central bankers have been saying is that it is important that this volatility, that these volatile movements, should not be very wide and that we should try to maintain a certain stability in these movements," he said. However, Spanish businesses will have to learn to live with a certain degree of volatility that is linked to Spain's being part of the wider euro zone, he said.///