The dollar is unlikely to show any big swings on the foreign exchange market soon as rapid growth allows the U.S. to finance its current account gap, European Central Bank Governing Council member Nout Wellink said on Thursday. "Such a strong economy as the United States has enough potential to finance its activities with money from the outside," Wellink told in an interview. "I don't see a reason at this very moment why a certain currency would move very substantially in the short term," added Wellink, who is also the head of the Dutch central bank. Concerns over the huge U.S. budget and current account deficits helped the euro to soar to life-highs above $1.29 earlier this year. But the single currency has fallen some six percent to levels around $1.2150 as policy makers from the Group of Seven richest industrial nations expressed their concern about the big currency movements.
The ECB joined the chorus, rattling the market which feared currency intervention. But Wellink played down the immediate risk of further dollar weakness on the back of the U.S. deficits. "This exchange rate imbalance has been with us for a number of years already and until now it could be easily financed by the international financial markets," he said. In the longer-term, the imbalance would be addressed by fiscal adjustment in the United States, converging growth rates and possibly more flexible exchange rates in Asia, where several currencies are now pegged to the dollar, he said.//