The 1994 Mexican financial crisis was commonly called the Tequila Crisis after a sudden peso devaluation.
Mexico devalued the peso in December 1994 after pressure from dwindling foreign-exchange reserves, political uncertainty, and a large current-account deficit. The devaluation damaged confidence in peso-denominated assets and contributed to a rapid withdrawal of capital. Mexican equities and bonds came under intense pressure as the crisis spread through the financial system.
The shock affected other emerging markets, producing what became known as the “Tequila effect.” The United States, the International Monetary Fund, and other institutions assembled a large emergency support package to help Mexico meet its obligations. The crisis is also called the Mexican peso crisis, while “Tequila Crisis” is the memorable label most associated with its international market contagion.