Invest and Spend Wisely! Learn About Mexican Money

A Quick Lesson in Pesos

By Patricia Ann Talley, MBA, and Editor*

If you are planning a trip or a move to Mexico, you will need to handle Mexican money – pesos. Below is a quick lesson about converting US or Canadian Dollars with tips about signing contracts and purchasing.

Mexican Money Has Different Colors and Sizes

I was recently in the grocery store with a non-Spanish-speaking Canadian woman in front of me. Her bill total was only about $250 pesos, but she handed the cashier a “wad” of $500 peso bills. Everyone in line gasped. The cashier took just one and gave her back all the others plus her change.

Mexican peso bills are different colors with different historical images on them. The value of the bills is clearly shown – $500, $200, $100, $50, and $20. Caution! There is a new version of the $500 peso bill that is blue rather than the traditional red. Mexican centavos (coins) are different sizes, and the values are clearly are also clearly shown.      

Note: There is a new $500 Pesos bill that is Blue. Do not confuse it with the $20 peso bill.

How to Convert Pesos to US or Canadian Dollars

People have various “formulas” for converting Mexican pesos to a US or Canadian dollar value. The calculation is easy; it starts with the Money Exchange Rate for your currency.

The Monetary Exchange Rate

The Monetary Exchange Rate is the financial system by which one currency is converted into another, enabling international transactions to take place. For example, if you are quoted a price in Mexican pesos, what is that value in US dollars? The Monetary Exchange Rate is used to convert the currencies.

Banks in Mexico and many business establishments will have the rate displayed (Exchange Rate US: xx), or you can check online for a currency converter.

The Conversion Formula

The formula is easy! Divide Mexican pesos (MX) by the Monetary Exchange Rate for US or Canadian dollars.

Sign Contracts is Mexican Pesos!

If you were buying a property or renting an apartment in the USA, would you sign a contract in Mexican pesos? No. Your contract would be in US dollars. The same holds true in reverse, especially when Monetary Exchange Rates are rising! Negotiate and sign all contracts in Mexican pesos!

Take the example above, if you signed a monthly rental contract for $18,000 Mexican pesos and the exchange rate increases to 30, then you would only have to pay the equivalent of $600 USD rather than $872. If you signed the contract in US Dollars, you would continue to pay $872, but your landlord would benefit and would exchange the US dollars for $26,160 Mexican Pesos rather than $18,000.      

Watch for Professional Fees Based on US Dollars

Another aspect of the Monetary Exchange Rate came up when my husband passed. We initially purchased our condo property in US dollars under the name of our Mexican Corporation. When he passed, our corporation had to “sell” the property to me under my personal name since I am now a dual citizen.

I first went to an American real estate agent who told me he would handle all aspects of the transaction, but he wanted me to “sell” to myself in US Dollars with his fees based on a percentage of that value. When we bought the condo years ago, the Monetary Exchange Rate was 10, now it is 20. He quoted his fees of $139,000 Mexican pesos based on the current rate. Ha!

I thanked him, picked up my papers and went directly to a Mexican Notary, and in Spanish, arranged to sell MY property to MYSELF in Mexican pesos. I sold it below the current market value, thus setting up a lower basis for my annual property taxes and made a will to pass it on to my relatives. The Notary’s fees were $37,000 Mexican pesos – a big difference.    

Purchasing & Tipping

As the saying goes, “When in Rome, do as the Romans do.” I went on the beach with an American woman to get a massage that cost $250 pesos. She gave the woman $500, a 100% tip, saying, “Do you know how much that would have cost me in Baltimore?” I included a 20% tip and gave the woman $300 pesos knowing that the price would be higher in the future. If a price is posted, I pay that price and tip a percentage (15%, 20%) based on the quality of the service.

I hope this helped.

*About the Author: Patricia Ann Talley holds a Bachelor of Science Degree in Investment Finance and a Master’s in Business Administration. A former corporate banker, she has spent over 20 years operating various businesses in Mexico and consults with the tourism industry. 

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