Mexican peso crisis

Economic crisis in Mexico

The Mexican peso crisis was a currency crisis sparked by the Mexican government's sudden devaluation of the peso against the U.S. dollar in December 1994, which became one of the first international financial crises ignited by capital flight. In the months leading up to the 1994 Mexican presidential election, the administration of incumbent president Carlos Salinas embarked on an expansionary fiscal and monetary policy. The Mexican treasury began issuing short-term debt instruments denominated in domestic currency with a guaranteed repayment in U.S. dollars, attracting foreign investors.

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