The 1994 Mexican financial crisis that caused a dramatic collapse in Mexico’s stock market and currency was the Tequila Crisis.
The crisis began in December 1994, soon after Mexico’s new government devalued the peso. Investors had become concerned about Mexico’s foreign-currency obligations, declining reserves, political instability, and the large amount of short-term debt known as tesobonos. The devaluation triggered capital flight and a deep loss of confidence.
The crisis spread beyond Mexico, particularly affecting other emerging markets in Latin America. The nickname “Tequila Crisis” refers to Mexico rather than to a particular exchange or company. The United States and international institutions organized a large rescue package, and Mexico’s economy later recovered, but the episode became a major example of how exchange-rate pressure can accelerate a stock-market collapse.