Which 1994 market crash began when Mexico devalued the peso and became known as the Tequila Crisis?

The 1994 market crash that began when Mexico devalued the peso was the Mexican peso crisis, also called the Tequila Crisis.

Mexico’s government devalued the peso in December 1994 after pressure had built against its exchange-rate policy. The decision undermined investor confidence, encouraged capital flight, and produced a severe financial crisis. Mexico’s stock market and currency both suffered, while the country faced difficulty refinancing short-term dollar-linked obligations.

The crisis spread beyond Mexico through investor reassessment of emerging markets. The United States organized a major rescue package involving loans and guarantees, helping Mexico meet its obligations and stabilize the peso. The episode also influenced how international institutions responded to later emerging-market crises.

The Tequila Crisis is not the same as the 1997 Asian financial crisis. Both involved currency pressure and rapidly changing investor confidence, but the Mexican episode began in Mexico in 1994, several years before Thailand’s baht crisis.