Mexican peso crisis

Conditions at the time

A current-account deficit and fragile funding burdened defense of the exchange rate.

How events unfolded

Devaluation on 12/20 and the subsequent move to a floating exchange rate alone did not stop financial turmoil.

Stakeholders and impacts

Mexico’s government, the IMF, the United States and international banks arranged response funding.

Information available at the time

In 1995/5, the IMF managing director explained the combination of an adjustment program and international financial support.

Findings confirmed later

The case illustrates risks from large capital movements and changes in exchange-rate regimes.

Alternative interpretations and limitations

Policy assessments in contemporary speeches reflect an institutional perspective; support did not eliminate every social cost.

Source-based context and interpretation

The IMF managing director's follow-up speech explains how short-term financing of a current-account deficit left vulnerabilities despite disinflation and improved market access. Early trade and currency stabilization followed support, but these were initial observations under an adjustment program involving tightening and protection for the poorest. ASSETCASTING interpretation: Lower inflation and larger reserves do not alone establish safe external financing. Examine maturities and reversal risk; early stability is not completed recovery, and the financing institution's account is not an independent final evaluation.

Evidence coverage through 1995-05-22 · Sources checked 2026-10-14

• Drawing Lessons from the Mexican Crisis ↗

Related events and periods1

• Global economic integration, IT investment, and recurring financial crises →

  An event or period whose recorded start falls within this editorial interval. This does not establish that it caused or represents the characteristics of the era, nor guarantee that the entire period falls within the interval.