Which Latin American currency crisis of 1994 began after Mexico devalued the peso?

The 1994 Latin American currency crisis that began after Mexico devalued the peso was the Tequila Crisis.

Mexico devalued the peso in December 1994 after pressure on its foreign-exchange reserves and an unsustainable exchange-rate policy. The decision caused investors to reassess Mexican assets and spread financial stress to other emerging markets.

The crisis involved a sharp fall in the peso, capital flight and difficulties for Mexican banks and borrowers with dollar-linked obligations. The United States and international institutions assembled a rescue package that helped Mexico meet its external financing needs and stabilize the currency.

The episode is also called the Mexican peso crisis. The term “Tequila Crisis” refers to its spillover across Latin America and other emerging markets, not to a stock-market crash confined to one exchange. It is commonly studied alongside the Asian financial crisis as an example of how global capital flows can transmit pressure quickly.