Which currency crisis triggered the 1994 Mexican stock-market crash known as the Tequila Crisis?

The Mexican peso crisis triggered the 1994 Mexican stock-market crash known as the Tequila Crisis.

Mexico devalued the peso in December 1994 after pressure on its currency reserves became unsustainable. Investors quickly reassessed Mexican assets, and the peso lost much of its value. The shock spread through financial markets and raised fears about other emerging economies.

The crisis involved more than a currency movement. Mexico had accumulated substantial short-term dollar-linked obligations, while political uncertainty and concerns about the current-account deficit weakened confidence. The stock market fell as investors withdrew capital and companies faced more expensive foreign-currency debt.

The United States and other countries arranged a large support package for Mexico, involving loans and guarantees. The event became known internationally as the Tequila Crisis, while “Tequila Effect” described its spillover into other emerging markets. It is not the same event as Argentina’s later 2001 crisis, although both affected Latin American financial markets.