Turkey's lira touches weakest level against U.S. Dollar

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ISTANBUL, Aug 5 - The Turkish lira touched its weakest level against the U.S. Dollar on Thursday on concerns over monetary policy following President Tayyip Erdogan said interest rates would decline.

The Lira was equivalent at 8.54 USD to the Dollar at GMT 0618 GMT, strengthening from a close of 8.48 on Wednesday. The currency has lost almost 12% so far this year.

In a broadcast interview President Erdogan said inflation, which hit a two-year high in July will disappear after August and interest rates would come down, reiterating his longstanding opposition to high interest rates.

An international currency trader in a bank said that, although inflation was expected to fall in the coming months, the market saw little room for the central bank to cut interest rates soon and that politicians' talk about a cut had weakened the lira.

Official data showed inflation hit 18.95% last month on the back of higher food and energy prices, almost matching the central bank's benchmark rate of 19%, increasing pressure on the bank to keep policy tight.