Rahul Gupta (Project Controller ACA MBA(Fin.)) 08 May 2010
What Does Tequila Effect Mean?
Informal name given to the impact of the 1994 Mexican economic crisis on the South American economy. The Tequila Effect occurred because of a sudden devaluation in the Mexican peso, which then caused other currencies in the region (the Southern Cone and
Also referred to as the "Mexican Shock".
Immediately after the Mexican peso was devalued in the early days of the Presidency of Ernesto Zedillo, South American countries suffered rapid currency depreciation. It was a known fact that the peso was overvalued, but the extent of