The 1994 Mexican financial crisis that followed a sharp devaluation of the peso was called the Tequila Crisis.
Mexico devalued the peso in December 1994 after pressure from declining reserves, a widening current-account deficit, political uncertainty, and a fixed exchange-rate regime that had become difficult to defend. The devaluation triggered capital flight and a severe financial shock.
Mexican stocks and bonds suffered, and the crisis threatened companies and banks with dollar-denominated liabilities. The United States and international institutions assembled a large assistance package to help Mexico meet its obligations and restore confidence.
The crisis is also known as the Mexican peso crisis. “Tequila Crisis” is the internationally familiar nickname and refers to Mexico, not a separate crash in a country whose national drink has another name. The episode demonstrated how quickly investor withdrawals could spread through emerging markets.