Which 1994 crisis began when Mexico devalued the peso and triggered a sharp stock-market sell-off?

The Mexican peso crisis began after Mexico devalued the peso in December 1994.

The government widened the peso’s exchange-rate band and then allowed a major devaluation on December 20, 1994. Investors reacted by withdrawing capital, and Mexico’s stock market and currency came under intense pressure. The crisis exposed the danger of large short-term foreign-currency debts, especially tesobonos, government securities linked to the U.S. dollar.

The turmoil became known as the Tequila Crisis and threatened to spread beyond Mexico. The United States, the International Monetary Fund, and other institutions assembled a rescue package worth tens of billions of dollars, helping Mexico meet its obligations and stabilize markets. The crisis is often confused with the 1997 Asian financial crisis, but the Mexican episode came earlier and centered on Mexico’s exchange-rate regime, external financing, and political uncertainty. Mexico’s economy suffered a sharp recession in 1995 before later recovering.