The crisis following Mexico’s December 1994 peso devaluation was called the Tequila Crisis.
Mexico devalued the peso in December 1994 after pressure on its foreign-exchange reserves and an unsustainable exchange-rate policy. The devaluation damaged confidence in Mexican assets and made dollar-denominated debt more difficult to service.
Investors soon reassessed other emerging markets, producing capital outflows and currency pressure beyond Mexico. The episode became a major example of contagion: financial stress in one country can lead investors to withdraw from markets that appear similar.
The United States and international institutions assembled a rescue package for Mexico. The crisis is also called the 1994 Mexican peso crisis. “Tequila” was a nickname for the international spillover, not the name of Mexico’s currency or stock exchange.