NEW YORK (Reuters) - The US dollar's steady decline may at least slow in the near term on the back of the Group of Seven's strongest statement of concern on currency fluctuations in seven years, analysts said. The G7's statement from a meeting in Washington was explicit about possible consequences from currency swings and conveyed increased alarm about persistent currency volatility with the euro/dollar still trading near a record high.

"Since our last meeting, there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability," the group of leading industrial nations said in the statement on Friday.

It was the dramatic change to the G7's declaration on currencies since the Boca Raton meeting in 2004, when those same leading industrialised nations first expressed worry currency volatility could imperil growth.

It was the first time since the Prague G7 meeting of 2000 that the seven rich nations have united to voice explicit concern about moves in major currencies, though then it was a weakening euro that caused concern.

"If there is going to be a reaction it will be dollar positive," said Kathy Lien, chief strategist of Forex Capital Markets. "The tone of the G7 statement hints they are serious about taking coordinated action."

The US currency fell to a record low against the euro of $1.5912 this week, according to Reuters data. The US unit is down 7.7 percent in 2008 to date at Friday's closing price for the euro of $1.5804 .

The dollar is down 9.3 percent against the yen in 2008, date and in March fell to its lowest in more than 12 years, according to Reuters data.

"The implicit message is that the G7 is moving closer towards concerted action in the event that persistent volatility in the foreign exchange market presents new risk of systemic failure in the financial industry," said Lena Komileva, head of G7 Market Economics at Tullett Prebon in London. "While action is unlikely in the short run, they are probably already considering a pre-emptive move in foreign exchange markets to slow the dollar's decline."

Still, most analysts emphasized the G7's statement did not mean there would be any concerted action to defend the dollar or calm volatility anytime soon. Nor would it prompt any huge bets that the US currency is about to reverse the losses of recent years on a sustained basis.

"While not saying they will defend the dollar per se, they are certainly warning markets of intervention," said Greg Salvaggio, a currency trader at Tempus Consulting in Washington DC. "This should push the euro down at the Asia open, but whether markets will test the central banks' resolve next week remains to be seen."

Indeed, Goldman Sachs told clients in a research note that the statement at the margin will work more "to limit the probability of further accelerated dollar weakness".

Michael Woolfolk, senior currency strategist at Bank of New York Mellon went so far as to say, "There was nothing surprising about the G7 and now that event risk is over, it's a green light to sell the dollar."

Forex Capital's Ms Lien said it was significant that large investment banks had been invited to discuss ways to avert a financial crisis. ScotiaBank chief executive Richard Waugh was among a select group of bankers to attend Friday's dinner with G7 finance officials at the US Treasury Department.

"It tells us to be wary of a big announcement next week," Ms Lien said.

China's currency was not a focus at this year's G7 given other global economic issues, but it was not left out.

"We welcome China's decision to increase the flexibility of its currency, but in view of its rising current account surplus and domestic inflation, we encourage accelerated appreciation of its effective exchange rate," the G7 said.

Since July 2005, when the yuan was revalued and its peg to the dollar scrapped, its rise against the dollar has gained pace, accelerating from 2.6 percent in 2005 to 3.4 percent in 2006 and 6.9 percent in 2007. So far this year, it is up 4.5 percent.

Chinese central bank governor Zhou Xiaochuan said on Saturday that structural adjustments are the best way to trim global imbalances and using exchange rates are of limited use and could create errors.