Nov. 10 (Bloomberg) -- European Central Bank President Jean-Claude Trichet and Canadian Finance Minister Jim Flaherty decried the sliding dollar less than a month after they and fellow Group of Seven officials chose not to raise the alarm.

Trichet called ``brutal'' currency shifts unwelcome, and Flaherty said Nov. 8 he's ``concerned'' by the Canadian dollar's surge. Their complaints came as Canada's Prime Minister Stephen Harper and French President Nicolas Sarkozy stepped up their own criticism of the U.S. dollar's plunge to a record low.

``There was a clear change in policy maker rhetoric this week,'' said Rebecca Patterson, a currency strategist at JPMorgan Chase & Co. in New York. ``For the dollar to have any bounce the U.S. needs to be included in the complaining.''

Protests may escalate as European finance ministers convene in Brussels and the Group of 20 meets near Cape Town next week. Without a shift from Treasury Secretary Henry Paulson, who has repeatedly endorsed a ``strong'' U.S. currency while hailing the stimulus to American growth from exports, the dollar is unlikely to react, analysts said.

Paulson reiterated yesterday his view that a ``strong dollar in our nation's interest'' and that markets are the best judge of currency values, during an unscheduled session with reporters to criticize Congress. The secretary also rejected suggestions that the dollar risks losing its status as the main global currency.

`Reserve Currency'

``The dollar has been the world's reserve currency since World War II and there's a reason,'' he said. ``I put the U.S. economy up against any in the world in terms of competitiveness -- that's a fact.''

The dollar fell to a record low against the euro this week and the weakest versus Canada's dollar since it was floated in 1950. The Federal Reserve's trade-weighted major currency index reached its lowest since the gauge debuted in 1971, when President Richard Nixon decoupled the dollar from gold.

Trichet in a Frankfurt press conference Nov. 8 revived language he last used during the euro's 2004 rally. The currency's moves ``were undoubtedly sharp and abrupt,'' he said.

Hours later, Flaherty said exchange rates are having a ``serious effect on Canada.'' Government figures yesterday showed Canada's trade surplus narrowed to the smallest since 1998 as exports slumped.

Decline Accelerates

The dollar has stoked American exports amid the worst housing recession since 1991 and threats to consumer spending. The trade deficit unexpectedly narrowed to the smallest since May 2005 in September, the Commerce Department said yesterday.

Adam Cole, head of currency strategy at RBC Capital Markets in London, said officials are unlikely to intervene in the market and buy dollars because its decline hasn't yet become ``disorderly.''

``The market will still assume it has the green light to sell dollars,'' said Cole, who noted the U.S. currency kept falling against the euro even after Trichet's comments.

The weakening dollar does pose risks for the U.S., adding to inflation pressures at a time when the Federal Reserve has been lowering interest rates to safeguard economic growth.

``We're going to make sure that the inflationary impact that may come from the weakening dollar is not passed into broader prices,'' Fed Chairman Ben S. Bernanke said at a congressional hearing two days ago.

He added that he was optimistic there will be ``a sound dollar in the medium term.''

`Very Concerned'

``The Fed is getting very concerned about the dollar,'' said Paul Kasriel, chief economist at Northern Trust Co. in Chicago and a former Fed economist. ``If the dollar keeps going down, they will be reluctant to make more cuts.''

The rhetoric from Trichet and Flaherty is a change from when G-7 finance ministers and central bankers met Oct. 19 in Washington and repeated past language on currencies in their statement. ``Disorderly movements in exchange rates are undesirable,'' they said, without mentioning the dollar. The G-7 groups the U.S., U.K., France, Germany, Italy, Canada and Japan.

Officials altered their language after the dollar's dive accelerated, increasing concern about the outlook for the global economy as the U.S. slows and the cost of credit rises. After slipping 4.6 percent in the year through July, the Fed's dollar index has lost another 8.2 percent since the start of August.

``The Canadians and the Europeans will push increasingly for a clear U.S. stance on these issues, especially since there is evidence that the price action has now started to have increasing momentum,'' said Jens Nordvig, a senior currency strategist at Goldman based in New York.

Stocks Drop

Declines in U.S. stocks are also risking the image of American assets losing their international appeal as the dollar drops. The Standard & Poor's 500 stock index is down almost 6 percent this month. Still, Treasury notes have yet to hint at diminished foreign demand, as they rose this month.

``Conditions appear right for the U.S. Treasury to endorse'' the strong-dollar ``policy more vigorously,'' Nordvig and his colleagues wrote in a report.

Foreign leaders are also speaking out. Sarkozy told American lawmakers Nov. 7 the U.S. must support the dollar or risk triggering a trade war. Harper said the same day the Canadian currency's climb has been rapid and unprecedented ``by any standard.''

The G-7 hasn't intervened to buy or sell currencies as a group since September 2000, when it came to the rescue of a weakening euro.

``It may take coordinated interventions to halt the current slide in the dollar,'' though ``the G-7 aren't yet likely to be in a position to consider this, said Stephen Jen, head of currency research in London at Morgan Stanley. He predicts the euro will reach $1.51 by year-end from $1.4678 late yesterday, the highest close since its 1999 introduction.

To contact the reporter on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net.

Last Updated: November 10, 2007 00:02 EST