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UPDATE 1-ECB's Constancio sees no accelerated dollar fall

Published 06/02/2009, 01:02 PM
Updated 06/02/2009, 01:10 PM

* Constancio says quick dollar fall unlikely

* Not in anyone's interests

* Says U.S. needs to raise savings rate gradually (Updates with quotes throughout)

LISBON, June 2 (Reuters) - European Central Bank Governing Council member Vitor Constancio said on Tuesday he did not expect any quick fall in the U.S. currency, calling such a depreciation "not desirable".

"I don't believe in a quick dollar fall," he told a banking conference in Lisbon. "The risks of of a steep dollar depreciation are enormous, but I don't think this will happen as, at the end of the day, this is not in anyone's interests."

The dollar has fallen against a basket of currencies and the euro to hit 5-1/2 month lows this week.

Constancio also said the United States needed to gradually raise its savings rate to help resolve the problem of global macroeconomic imbalances or risk "an enormous dollar depreciation".

"The only solution is to have a gradual evolution: the United States have to raise their savings rate and countries with surpluses have to boost their consumption and internal spending and let their currencies appreciate a bit," Constancio said.

Constancio said earlier developed countries were facing a period of "extremely moderate" growth following the global crisis and the United States and Asian eocnomies had to resolve the problem of macroeconomic imbalances.

"There is a necessity to resolve the central problem of global imbalances. This problem of global macroeconomic imbalances is still present and it is a problem yet to be solved," he added.

(Reporting by Sergio Goncalves; writing by Andrei Khalip; Editing by Ron Askew)

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