The crisis that began in Mexico in December 1994 after the peso was devalued was the Mexican peso crisis.
Mexico had maintained a managed exchange-rate system, but large current-account deficits, political uncertainty, and falling foreign reserves increased pressure on the peso. In December 1994, the government widened the currency’s trading band and then allowed a major devaluation. Investors quickly reassessed Mexican assets, causing heavy selling in stocks and bonds.
The crisis spread financial stress to other emerging markets and became known internationally as the Tequila Crisis. The United States and the International Monetary Fund assembled a rescue package worth tens of billions of dollars, helping Mexico meet its external obligations and stabilize its currency.
The Mexican peso crisis is sometimes confused with the broader Latin American debt crisis of the 1980s or the Asian financial crisis of 1997. Those episodes involved different regions and immediate triggers, although all demonstrated how quickly investor confidence can move across borders.