--Peso weakens 0.3% vs. U.S. dollar
--Greek election rally fizzles, euro jitters resurface
--Fed extends Operation Twist through 2012
By Amy Guthrie
MEXICO CITY--The Mexican peso succumbed to mild profit-taking
Wednesday as the week's relief rally following the Greek election
results ran out of steam and the dollar gained broadly because the
U.S. Federal Reserve held off on more aggressive action to juice the
U.S. economy.
The peso closed at 13.7225 to the U.S. dollar, according to Infosel,
0.3% weaker compared with MXN13.6865 at the prior session's close. As
of Tuesday's close, the currency had gained 1.7% this week.
The currency bounced briefly into positive territory midday on
misleading headlines indicating German Chancellor Angela Merkel had
verbalized support for buying euro-zone sovereign bonds in secondary
trade. Upon further scrutiny, it became clear Ms. Merkel had stressed
that there are, at the moment, no concrete plans to use the European
Financial Stability Facility to buy such bonds.
Mexican brokerage Banorte-Ixe attributed the peso's modest retreat to
profit-taking following gains on relief that pro-bailout politicians
won a majority in the weekend Greek election.
Meanwhile, as anticipated Wednesday, the Fed said it is going to
extend its Operation Twist stimulus measure beyond June 30. Operation
Twist involves selling short-term U.S. Treasurys and buying
longer-dated ones in an effort to keep long-term borrowing costs down.
The dollar moved higher against many of its rivals following the Fed
disclosure, suggesting that currency investors had already discounted
the possibility of more stimulus or that they were relieved the Fed is
saving additional tools for a later date. In the past, the dollar has
weakened after hints of additional Fed stimulus.
Write to Amy Guthrie at amy.guthrie@dowjones.com.
(END) Dow Jones Newswires
June 20, 2012 16:39 ET (20:39 GMT)
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