Mexico’s 1994–1995 peso crisis caused a sharp fall in its stock market and currency.
The crisis began after Mexico devalued the peso in December 1994. Investors had become concerned about the country’s current-account deficit, short-term dollar-linked debt, political instability, and the sustainability of the peso’s exchange-rate policy.
Capital fled rapidly, the peso lost much of its value, and Mexican share prices dropped sharply. The resulting financial emergency spread concerns to other emerging markets and became known internationally as the Tequila Crisis.
The United States and international institutions organized a large assistance package to help Mexico meet its obligations. The episode is sometimes confused with the 1997 Asian financial crisis, which began with Thailand’s baht crisis, or Argentina’s later 2001 debt default. Those were separate crises, although all demonstrated how quickly investor confidence can move across borders.