foreach $item1 (keys(%hash1)) {
  foreach $item2 (keys(%hash2)) {
    if (exists $hash1{$item2}) { print "matches\n";}
  }
}
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This code is a bit confusing because you don't use $item1 at all. If you have two nested loops anyway, you don't need exists and can simply compare lc($item1) eq lc($item2).