Turkey: Erdogan to bring back mainsteam former economy tsar Simsek
Former economy minister Mehmet Simsek is set to return to Turkish President Recep Tayyip Erdogan's top team, raising hopes of a return to a more mainstream economic path in the country.
His return as finance and treasury minister had been rumoured since he held a meeting with Erdogan on Monday and was first reported by Bloomberg on Friday.
The former Merill Lynch economist served as finance minister and deputy prime minister between 2009 and 2018 and was seen as a safe pair of hands by the international markets. He was removed from his position as the president began to pursue more unorthodox policies and appointed his son-in-law Berat Albayrak in his place.
The move could help offset years of financial turmoil in Turkey, driven by Erdogan's controversial belief that high interest rates lead to high inflation.
The lira has shed more than 90 percent of its value over the past decade as the country has been hit by soaring inflation.
More than $27bn in foreign currency reserves have been burned through since the end of 2022 as the government sought to prop up its currency and finance its enormous current account deficit.
However, although Simsek's return could reassure mainstream economists, some believe the erratic nature of Turkish politics could mean it makes little difference.
Timothy Ash, a senior sovereign strategist at Bluebay Asset Management, said the markets understand that Erdogan could fire Simsek at any time.
“Markets like and trust Simsek but they do not trust Erdogan to give him a mandate to actually sort the balance of payments problems,” Ash told MEE.
“Rate hikes are needed to slow down the import demand.”