Mexicos Financial Crisis

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The financial crisis in Mexico from 1988 to 1994 can be attributed to a mix of economic, financial, and political factors, particularly under Carlos Salinas's administration. His policies aimed at attracting foreign investment, yet the reliance on instruments like tesobonos and a semi-fixed exchange rate ultimately led to vulnerabilities. The Central Bank's strategies included maintaining exchange rate bands, raising interest rates, and utilizing international reserves. However, issues like excessive private sector lending and a current account deficit destabilized the economy, culminating in the crisis.