Which 1994 crisis began with Mexico's peso devaluation and caused a sharp fall in Mexican stocks?

The Mexican peso crisis began with Mexico’s peso devaluation in December 1994 and caused a sharp fall in Mexican stocks.

Mexico had maintained a controlled exchange-rate regime while accumulating substantial short-term dollar-linked obligations. Political instability, concerns about reserves, and pressure on the peso made the arrangement increasingly difficult to defend. After the government devalued the currency in December 1994, investors rapidly withdrew capital.

The peso lost much of its value, interest rates rose, and Mexican companies and banks faced heavier burdens on dollar-denominated debt. The crisis spread to other emerging markets, creating what became known as the Tequila Crisis.

The United States and the International Monetary Fund assembled a large assistance package to help Mexico meet its obligations. The episode is distinct from the 1997 Asian crisis: Mexico’s currency devaluation came first, while the Asian crisis began with Thailand’s baht in 1997.