The 1994 Mexican financial crisis that caused a major stock-market sell-off was called the Tequila Crisis. It began after Mexico devalued the peso in December 1994, prompting investors to reassess the country’s dollar-linked debt and economic stability.
Capital flowed out rapidly, and Mexico faced difficulty refinancing short-term obligations known as tesobonos. The crisis spread beyond Mexico as investors reduced exposure to other emerging markets. The United States and international institutions assembled a large assistance package to help Mexico meet its commitments.
The episode is also called the Mexican peso crisis. “Tequila Crisis” became the common international nickname, while “peso crisis” describes the currency and financing dimension more directly. It preceded later emerging-market turmoil, including the Asian financial crisis of 1997.