Which 1994–1995 crisis followed Mexico’s devaluation of the peso and caused turmoil in global markets?

The 1994–1995 crisis following Mexico’s devaluation of the peso was the Mexican peso crisis.

The crisis began in December 1994, shortly after Mexico’s new administration took office. The government devalued the peso after pressure on its foreign-exchange reserves became unsustainable. Investors rapidly withdrew capital, and the currency lost much of its value.

The shock spread beyond Mexico through financial markets in what became known as the Tequila Effect. The United States organized a rescue package involving loan guarantees and support from international institutions, helping Mexico meet its external obligations.

The episode is distinct from the 1997 Asian financial crisis, which began in Thailand. It is also called the Tequila Crisis, although “Mexican peso crisis” is the clearest formal name for the event.