Treasury & FX in Mexico

Commentary

[The full report can be downloaded by subscribers at the foot of this article]

For the Latin American region, Mexico stands out as being unusually easy to operate in: there are no exchange controls, pooling is allowed, accounts can be operated from offshore, hedging is easy. So it works.

Of course, nothing is perfect: 

• Banking can be more difficult than usual, especially as Citi has exited the market. They have a relationship with CitiBanamex, which works, but not as well as a direct relationship with Citi.
• The processes for opening bank accounts and changing signatories are bureaucratic and painful.
• The tax regime is burdensome and complex. Withholding tax is a problem.
• One participant has included a maquiladora company in their local cash pool. This has caused significant issues with the tax authorities.
• Although FX works, the currency is very volatile, and liquidity can be an issue in time zones outside the Americas, though not all participants have had this issue.

Bottom line: Mexico is the easiest country in the region to work in. But it still has some of the complexities you expect in Latin America!

Our latest report on Mexico is here.