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Wednesday, March 21, 2012

Mexican Transactions in a Foreign Currency

A question frequently asked by foreigners doing business in Mexico is whether the parties can use dollars or any other foreign currency as a currency for their particular transaction. Mexico's Monetary Law provides, as a general rule, that no foreign currency shall have legal value in Mexico. The legislative intent behind this provision was to prevent the circulation of foreign currency in the country. That does not mean, however, that the parties to an agreement cannot set the transaction price in a foreign currency. In fact, the parties may even agree to a fixed exchange rate at the time the transaction is entered into, as such type of agreement is not against public policy.

There may be a significant difference, thus, between setting a price in a foreign currency and asking that payment be made in a foreign currency.
 
Mauricio Leon de la Barra is an international law attorney licensed to practice law in Mexico and California, and has more than 15 years of experience representing clients in business and real estate transactions and litigation involving international, U.S. and Mexican laws.