The 1994 crisis following Mexico’s devaluation of the peso was the Tequila crisis.
Mexico devalued the peso in December 1994 after pressure on its foreign-exchange reserves. Investors rapidly withdrew capital, and the peso lost much of its value. The shock spread to other emerging markets, especially in Latin America.
Mexico had accumulated substantial short-term dollar-linked obligations known as tesobonos. Once confidence weakened, the country faced difficulty refinancing those debts. The United States and international institutions assembled a support package to help Mexico avoid default.
The crisis is also called the Mexican peso crisis. “Tequila effect” describes the contagion to other markets, not a separate beverage-related event. The episode showed how exchange-rate commitments and short-term foreign-currency liabilities could make a sudden capital outflow especially dangerous.