The Tequila Crisis was the nickname given to the 1994 Mexican financial crisis that triggered a major stock-market sell-off.
The crisis began after Mexico devalued the peso in December 1994. Investors rapidly withdrew capital, foreign-exchange reserves fell, and the peso lost much of its value. Mexico's financial stress quickly affected its equity and bond markets and raised fears about other emerging economies.
The United States, the International Monetary Fund, and other international institutions assembled a rescue package worth about $50 billion. The support helped Mexico meet its external obligations and stabilize financial markets, although the country experienced a severe recession in 1995.
The episode is also called the Mexican peso crisis. “Tequila Crisis” became the better-known international nickname, and the turmoil helped popularize the later term “contagion” for financial shocks spreading across borders. It is distinct from the Asian financial crisis of 1997.