Turkish lira weakens, market seems to shrug off Erdogan's comments on Moody's

ISTANBUL, June 14 (Reuters) - Turkey's lira weakened slightly against the dollar in volatile, pre-holiday trade on Thursday, with investors appearing to largely shrug off comments from President Tayyip Erdogan that he would carry out an "operation" against ratings agency Moody's.

In an interview late on Wednesday, Erdogan, who has frequently characterised the criticism of ratings agencies as an attack on Turkey, said he would take action against Moody's following June 24 elections. The agency last week downgraded ratings of 17 Turkish banks, saying "the operating environment in Turkey has deteriorated".

While the lira edged in and out of positive territory against the dollar in thin trade ahead of the Eid al-Fitr holiday, market participants said it was helped by the latest minutes from the central bank.

In the minutes of last week's policy-setting meeting, released on Thursday, the bank said it would deliver further tightening if needed. It also said inflation and inflation expectations continued to pose risks to prices, the minutes showed.

"The minutes the central bank published imply that the central bank remains committed to maintaining tight monetary policy," said Piotr Matys, an emerging markets forex strategist at Rabobank.

"But we'll have to wait for the outcome of elections and more importantly whether the administration will accelerate the base of reforms."

The lira stood at 4.6735 against the dollar at 1339 GMT, slightly weaker from Wednesday's close of 4.6600.

Turks go to the polls on June 24 for parliamentary and presidential elections. Tayyip Erdogan is seen falling short of a first-round victory in Turkey's presidential election, with his support dipping 1.6 points in one week, according to a survey by pollster Gezici published on Thursday.

The main BIST 100 share index was up 1.11 percent to 94,540 points after a half day session on Thursday.

Friday is a national holiday in Turkey. (Reporting by Ali Kucukgocmen; Editing by David Dolan)

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