Turkish lira hits weakest level in six months after U.S. inflation

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Turkish lira banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration

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ISTANBUL, May 13 (Reuters) - Turkey's lira fell more than 1% against the dollar to its weakest level in six months on Thursday, a market holiday in Turkey, after U.S. inflation figures put it under pressure.

The lira slipped as far as 8.5100 to the dollar, its weakest since last November when it hit a record 8.5800 against the dollar.

Data on Wednesday showed U.S. consumer prices jumped by the most in nearly 12 years in April, boosting the dollar against emerging market currencies.

Commerzbank analyst Tatha Ghose said the lira was susceptible to "self-reinforcing spirals", as weakness against the dollar feeds inflation and worsens the outlook for the currency.

With the Central Bank reluctant to push its policy rate above its current level of 19% "the original lira depreciation can produce a feedback loop from exchange rate weakness to higher inflation and back," Ghose said.

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Reporting by Dominic Evans; Editing by Kevin Liffey

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