Mexico’s 1994–1995 financial crisis was nicknamed the Tequila Crisis.
The crisis began after Mexico devalued the peso in December 1994. Investors rapidly withdrew capital, and the currency lost much of its value. The resulting turmoil affected Mexican bonds, equities, banks, and businesses, while concerns spread to other emerging markets.
The episode was linked to large short-term foreign-currency liabilities, a current-account deficit, political uncertainty, and the government’s difficulty maintaining the peso’s exchange-rate regime. Mexico received an international rescue package led by the United States and the International Monetary Fund.
The term is a memorable example of a crisis nickname based on national culture. It is not the same event as the 1997 Asian financial crisis, although both episodes demonstrated how quickly investor confidence could move across borders.