Mexico's Peso Closes Weaker Versus Dollar As Greek Deal Reached

MEXICO CITY (Dow Jones)--Mexico's peso closed weaker against the U.S. dollar Tuesday, giving back some recent gains after European leaders agreed to a new bailout package for Greece.

--Emerging currencies cede ground after Greek deal reached

--BBH notes emerging market currency rally had already lost steam

--Banorte says Greek deal likely was 'priced in'

U.S. dollar gains in the wake of the EUR130 billion ($172 billion) bailout agreement came as a "sell the fact theme prevailed," Brown Brothers Harriman said in a report, adding it is "far from clear that it ends even this chapter of the saga."

The peso was among emerging currencies that ceded ground, quoted in Mexico City at MXN12.7925, according to Infosel, compared with MXN12.7055 at the close Monday.

BBH noted that the rally in emerging market currencies slowed in February, compared with January. "Although we think EM can extend its gains against the dollar should risk appetite hold up, we adopt a slightly more cautious approach for now. As such, we prefer to rotate out of the high beta currencies in favor of the lower beta currencies and ones where central banks are not yet resisting appreciation, such as PLN, SGD and MXN," BBH said.

Banorte-Ixe said the peso's losses "suggest that a large part of the positive expectations regarding the [Greek] agreement was already priced in by the market."

For the week, Banorte said it expects the peso to hold in a range between MXN12.62 to MXN12.85 to the dollar, and still sees the currency reaching MXN12.50 by the end of the year.

Confirmation of the Greek agreement led investors to start worrying about what happens next.

"Nevertheless, some countries require parliamentary approval [of the deal] and some investors consider that Greece won't be able to carry out all the reforms, and could fall into trouble again in the second half of the year," Banco Base said in a report.