Mexico’s 1994–1995 financial crisis is commonly nicknamed the Tequila Crisis. The crisis began after Mexico devalued the peso in December 1994, prompting investors to withdraw capital and causing severe pressure on the country’s financial system.
The episode followed years of large capital inflows, rising private-sector borrowing, and a widening current-account deficit. Political instability, including the 1994 Zapatista uprising and the assassination of presidential candidate Luis Donaldo Colosio, also weakened investor confidence.
The peso’s devaluation rapidly increased the burden of dollar-denominated debts. Mexico received an international rescue package led by the United States and the International Monetary Fund, helping stabilize the currency and prevent a broader default.
The crisis is also called the Mexican peso crisis. It should not be confused with the 1997 Asian financial crisis, although both involved sudden reversals of international investment flows and pressure on exchange rates.