Hummels, 27, has been heavily linked with a move away from the Bundesliga giants, including to rivals Bayern Munich and numerous Premier League clubs.
Watzke said it would be wrong for Dortmund to deny the centre-back a move, but added there would be no hesitation if clubs are unwilling to meet their asking price.
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"To forbid Hummels to leave would be small-minded," he said in the AUDI-Star-Talk on Monday.
"We have to accept that someone playing for Dortmund for eight years and getting [close to] 28 starts to think about his situation.
"If the club isn't ready to pay a lot of money, he has a contract in Dortmund. And I am sure that he has no problem with continuing playing for Dortmund."
Hummels has impressed during another consistent campaign and is under contract until mid-2017 in Dortmund.