The dollar's direction will be swayed more by U.S. President Donald Trump's foreign policy than it will be by the next chair of the U.S. Federal Reserve, according to economist Barry Eichengreen.
The dollar hit a three-month high against a basket of other currencies on Friday with investors now looking ahead to December, when the Fed will resume increasing the interest rate amid data showing a strengthening home economy. Expectations have also grown that the next fed chair appointed by Trump could be someone who favors a faster pace of rate increases, thereby strengthening the dollar.
But Eichengreen, a professor of economics and political science at the University of California, Berkeley, told CNBC on Monday that the dollar's future value would be determined by U.S. foreign policy rather than by domestic issues.
"People are focusing too much on the next Fed chair," Eichengreen said. "Whoever it is, (he or she) is going to be a monetary mainstream person and I don't think that will move the dollar too much. What I do think will move the dollar is geopolitics," he said.