Mexico’s stock exchange suffered a major crash after the 1994 peso crisis.
The Mexican peso crisis began in December 1994 when Mexico devalued the peso after pressure on its foreign-exchange reserves. Investors rapidly reassessed Mexican assets, and the resulting capital flight caused severe stress in the country’s financial markets, including the Mexican Stock Exchange.
The crisis was linked to a large current-account deficit, short-term dollar-linked debt, political uncertainty, and the government’s difficulty maintaining the peso’s exchange-rate regime. The United States and international institutions organized a financial rescue package to help Mexico meet its obligations.
The episode is also called the Tequila Crisis. That nickname refers to the crisis’s Mexican origin and its contagion effects, as investor concern spread to other emerging markets. It should not be confused with the 1997 Asian financial crisis, which began in Thailand.