The 1994 Mexican financial crisis that triggered market turmoil across Latin America was called the Tequila crisis.
The crisis began after Mexico devalued the peso in December 1994. Investors became concerned about Mexico’s foreign-currency obligations and the country’s ability to maintain its exchange-rate policy. Capital flowed out, the peso weakened sharply, and Mexican stock prices fell.
The turmoil spread through emerging markets in Latin America and became known as the Tequila crisis, a nickname derived from Mexico’s association with tequila. The United States and international institutions arranged financial support to help stabilize Mexico.
The episode is sometimes confused with the 1982 Latin American debt crisis, which involved widespread sovereign debt problems. The Tequila crisis specifically refers to Mexico’s 1994–95 financial shock and its regional spillovers.