Reuters: Government concerned over Nebati's appointment

When Turkey's new Finance Minister Nureddin Nebati was asked last month to give details of an initiative to stem a collapse in the lira, he found a novel way to explain his strategy.

"I won't give a number now," he told a surprised television interviewer. "Can you look into my eyes? What do you see?... The economy is the sparkle in the eyes."

According to Reuters, for the man picked by President Tayyip Erdogan and a tumbling currency, the response was characteristically unconventional.

Six weeks into the most high profile job in Erdogan's cabinet, combining the finance and treasury portfolios, the 58-year-old minister has baffled markets with remarks on issues ranging from the inflation outlook to the U.S. Federal Reserve.

"We have put aside orthodox policies, now it is heterodox policies," Nebati told businesses two weeks ago, referring to the rate cuts, which run counter to mainstream economic theory that fighting inflation requires higher rates, not lower.

"We will move not on a path drawn for us by others but on our own path," he said in one of many speeches and television interviews he has made since taking the job.

Government critics, including opposition politicians and foreign economists, say that path spells danger for Turkey, and that Erdogan had further unsettled markets by appointing Nebati.

"Instead of instilling confidence in the economy, you took steps that petrified everyone," the leader of the nationalist IYI Party Meral Aksener said, addressing Erdogan. "As our nation is hit, the 'Nebati Comet' you brought to the helm of the economy...shamelessly speaks of the 'sparkle in his eyes'."

GOVERNMENT'S CONCERNS FOR NEBATI

Even some sources close to the government have expressed concern, saying Turkey could have picked a more market-friendly figure to run the economy at such a turbulent time.

Nebati could not be reached for comment and a Finance Ministry spokesman did not respond to questions about the minister's role. Erdogan's office did not immediately respond to a request for comment.

Turkey's lira has fluctuated wildly in the past weeks, hitting a record low of more than 18 to the dollar last month, before recovering to just over 10 and then settling at current levels just under 14 to the U.S. currency.

A senior official from Erdogan's AK Party said Nebati took office when the global economy was "in a difficult place" and had implemented new regulations, was working closely with the president, and had stemmed the collapse of the lira.

"Some pessimistic comments are being made, and I don't think Nebati deserves this," the official said.

"POSITIVE VICIOUS CIRCLE"

Nebati has made several startling statements since his appointment, wrongly saying that the U.S. Fed is owned by five families. He also said Turkey had entered a "positive vicious circle".

Asked about a huge recovery in the lira after Erdogan announced last month that deposits could be protected from currency fluctuations, Nebati insisted state institutions had no role in the spike, even though official data points to significant interventions during December.

Central bank figures showed its foreign currency holdings dropped nearly $20 billion last month. Although the bank did not declare any dollar sales on the day the lira surged, analysts say half of the reserve drop was the result of backdoor interventions.

An AKP parliamentarian said Erdogan did not believe the deposit protection scheme had been clearly explained by Nebati and the government as a whole, and was concerned that although it boosted the lira, the early impact had stalled.

Nebati, however, has said demand for the scheme has been strong and that inflation will peak this month, before falling to single digits before elections scheduled for mid-2023.