Fernandes is a highly-rated prospect in Portugal

Fernandes, 20, was signed on a season-long loan in the summer but will now return to Portugal in January.

"The fee is �12m and I don't want to pay �12m," said Redknapp. "I've spoken to Manuel about it and even he thinks the price is too high."

Fernandes did not play at Arsenal as a permanent deal would be triggered if he plays three Premiership games in a row.

Redknapp added: "All I know is if he starts three Premier League games in a row, a permanent deal clicks in. I didn't do the deal. It wasn't my idea. I inherited it."

Redknapp also defended the club's owner Alexandre Gaydamak over criticism he has not invested more money in the Fratton Park squad.

"Sacha is a terrific young fellow and he's given me terrific support," said Redknapp.

"We have a good relationship and he has never interfered. I think that if I went to him to get a couple of players (in January) he will be there. The owner will back me. That is not a problem.

"He didn't tell me not to play Fernandes at Arsenal. The player was ill anyway, but I wouldn't have played him on Saturday.

"He's a good player and for the right fee I would buy him. He's a young kid with potential, but I couldn't put my name to �12m for him."