What was the 1994 Mexican financial crisis and stock-market turmoil commonly called?

The 1994 Mexican financial crisis and stock-market turmoil was commonly called the Tequila Crisis.

The crisis began after Mexico devalued the peso in December 1994. Investors became concerned about Mexico’s foreign-currency liabilities and its ability to defend the exchange rate, leading to capital flight, falling asset prices, and a broader financial emergency.

The shock spread beyond Mexico as investors reassessed risks in other emerging markets. The United States organized a rescue package involving loans and guarantees, while the International Monetary Fund also provided assistance. Mexico’s economy entered a severe recession, but financial stabilization followed after the emergency response and policy adjustments.

The phrase “Tequila Crisis” refers specifically to Mexico’s 1994–1995 crisis, not the later Asian financial crisis of 1997. The episode is an important example of how exchange-rate pressure, short-term foreign borrowing, and investor contagion can combine to create a sudden market collapse.