Which Mexican currency crisis caused a sharp stock-market fall in December 1994?

The Mexican currency crisis that caused a sharp stock-market fall in December 1994 was called the Tequila Crisis.

The crisis began after Mexico devalued the peso in December 1994. Investors had become concerned about Mexico’s current-account deficit, political instability, and the country’s large amount of short-term dollar-linked debt. The devaluation triggered capital flight and a rapid loss of confidence.

The peso fell sharply, interest rates rose, and Mexican financial markets suffered. The United States and international institutions organized a rescue package to help Mexico meet its obligations and stabilize the currency. The shock also affected other emerging markets, a spillover sometimes called the “Tequila effect.”

The crisis is also known as the 1994 Mexican peso crisis. “Tequila Crisis” is its established nickname, not the name of a stock index or a separate event in Mexico’s earlier financial history.