A predicted weakening of the US dollar will hit Bermuda’s buying power, a bank currency expert said yesterday.

Daragh Maher, head of foreign exchange strategy at global bank HSBC, said: “The last couple of years, the US dollar has been stronger than most currencies in the world.

“I guess what we are suggesting is that perhaps that sweet spot has passed.

“We are now in a position where the dollar will be weaker, so the purchasing power of the Bermuda dollar will be slightly diminished.”

Mr Maher, who is based in New York, was speaking after a presentation on global currency movements at HSBC’s Harbourfront headquarters on Hamilton’s Front Street.

He told the audience that HSBC had taken “a counter-consensus view” and been “bearish” on the US dollar over the past few months.

Mr Maher said that history showed that the dollar goes down when the Federal Reserve — known as the Fed — raises interest rates.

“Irrespective of whether the central bank, the Fed, raises rates once, four or eight times the dollar has gone down.”

And he said that the Fed did not want a stronger dollar because it affects exports and inflation at home.

Mr Maher added that the outlook for the US economy was “it’s not doing great, it’s not doing bad — the Fed doesn’t have to do much.”

And he said that, irrespective of who wins the US presidential election in November, it would be unlikely to affect US fiscal policy in a major way.

He added: “If you look at what other central banks have experienced post-crisis, most of the central banks have tried to tighten policy as a result of the financial crisis. Every one of them has had to reverse.”

Mr Maher said that the European Central Bank had just announced it would buy more bonds, cut interest rates and start subsidies to lenders.

The ECB move is designed to stave off deflation.

Mr Maher said: “Negative rates do not have an impact on the currency. That might seem counter-intuitive, but that’s what happens.”

He added that the June referendum on whether Britain will leave the European Union — dubbed Brexit — appeared to be likely to back remaining a member, with bookmakers giving an exit vote only a 1 in 3 change of success.

“If someone is undecided, they will say ‘that’s not worth the risk’ frankly. The balance of risk now favours Britain staying.”

And he predicted: “If Britain leaves the EU, it will be negative for sterling. By contrast, if Britain stays in the EU, that might actually be quite good for sterling.”

“We could get a very sharp rally in Sterling around that event.”

He added that the rally in oil prices since mid-February was “bizarre.”

Mr Maher explained that Opec and non-Opec nations had agreed to increase oil output to an all-time high.

“The reality is every day we walk into the office more oil is coming out of the ground than we consume.”

He predicted that oil prices would fall again — but not to the “super-lows” already seen.