Tequila crisis

Crisis Tequila was the name that received the Mexican monetary crisis in 1994 due to the strong depreciation of the Mexican peso and the lack of international reserves.

The beginning of the crisis underlies the strong public deficit (7%) of the Mexican administration in early 1994, which had to launch various instruments (among them the Tesobonos) and that did not serve to clear doubts and lack of confidence among international investors , which quickly chose to sell these obligations thus emptying the international reserves of the National Bank of Mexico, devaluing the peso and increasing the debt in turn by being backed in dollars.

The monetary policy of the government was to increase interest rates in order to reduce the leakage of dollars from the National Bank through the contraction of the money supply and to offset on its part with a revaluation of the Mexican peso, which although it had an effect Null due to the distrust and incessant transfer of the reserves, it accentuated the crisis by not diminishing the public expenditure of the administration because it was in electoral period and did not want to lose the confidence of its constituents.

Historical background

During the 1990s, internationalization and the free movement of capitals made various crises appear in emerging countries, whether financial, exchange or economic. In the case of Mexico, the birth of the North American Free Trade Agreement meant a strong influx of foreign capital into the Mexican economy that resulted in the commercialization of bonds and short-term public debt by the Mexican government to finance certain changes structural , but that nevertheless these obligations were quoted in Mexican pesos anchored to the dollar, so that they could be protected and guaranteed by the US currency as a strong currency. This gave rise to the Tequila Crisis, named for relating to Mexico, the country of this alcohol drink.

For more than a decade, Mexico has been affected to a greater or lesser extent by this fact, always pending the weakness of the Mexican peso and foreign investments, capital being diverted towards the purchase of assets and public companies as a form of attraction for foreign investment. durable and maintaining the weight in acceptable bands for the attraction of capital.

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