(Bloomberg) — Turkish President Recep Tayyip Erdogan will appoint Mehmet Simsek as his new treasury and finance minister, bringing back an advocate of conventional economics to shore up market confidence after elections, according to people with direct knowledge of the matter.
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Simsek is set to be in charge of all of Turkey’s economic policies in the new cabinet, which is expected to be announced on Saturday, the people said, asking not to be identified because of sensitivity of the matter.
The lira briefly erased losses on the news before dropping to trade 0.3% weaker against the US dollar of 9:25 am in Istanbul. The cost of insuring against a sovereign default over the next five years dipped around 10 basis points to 570 basis points.
Erdogan’s office and a spokesperson for Simsek both declined to comment.
Investors have been on edge since Erdogan cruised to victory in a presidential runoff on May 28, with the lira falling to fresh record lows. In his speech after the ballot, Erdogan pledged to install “a finance team with international credibility” that would ensure stability and confidence.
Simsek, a former Merrill Lynch strategist respected by investors for his defense of orthodox economic views, worked as Erdogan’s finance and deputy prime minister in the past, before stepping down in 2018 when Turkey transitioned to an executive presidency.
In his final cabinet stint, Simsek made frequent trips to London with then central bank Governor Murat Cetinkaya. They tried to soothe investors’ concerns over Erdogan’s ambitions to take greater control of economic policy, which was causing the lira to nosedive.
In recent years under Erdogan, Turkey has embarked on unconventional economic policies that include keeping interest rates low despite high inflation.
Simsek will replace Nureddin Nebati, who’s been finance minister since late 2021. Nebati, previously a deputy finance minister, was perceived to be close to former economy czar Berat Albayrak, a son-in-law of Erdogan.
–With assistance from Beril Akman.
(Updates with market reaction from third paragraph)
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