1994 Mexican Peso Crisis
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(2000 words)
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Brought on by Mexico's "Tequila Crisis" inwhich the country's current account deficit was seven percent of its gross domestic product and its foreign reserves dwindled, the peso's fixed exchange rate against the dollar "plunged by around 50% within six months.... Most notably, the impact of the US monetary policy, and its ramification for Mexico's small and debtridden, archaic economy were little understood, and mostly ignored" (para.... The confluence of these destabilizing factors, along with Mexico's weak economic fundamentals and its poor financial infrastructure, made risk adjusted return on peso assets too low and therefore peso-denominated assets became less attractive....