MercoPress. South Atlantic News Agency

Merval historic record.

The leading stock market index in Argentina has hit its highest ever level since opening for business in 1986.

The Merval index closed 2.8% higher at 902.8 points, beating the previous high of 900.3 touched in June 1992. Argentine stocks have gained more than 70% this year, following the economic collapse of 2002. But some analysts watching Argentina's recovery are concerned that it has returned to the cycle of boom and bust.

The Argentine economy - notorious in recent years for disaster and deep recession - has been recovering this year. The economy expanded by 6.6% in the first half of the year and is forecast to grow at a even faster pace for the year as a whole. Investors were particularly cheered in September when President Nestor Kirchner reached an agreement with the International Monetary Fund for a vital new loan. The deal means that Argentina will only have to pay interest on a $21bn loan over the next three years, allowing it to concentrate on its economic recovery. Investors have also applauded the steady hand of President Kirchner and his economy minister Roberto Lavagna since elections in April. But there are concerns over the depth of the reforms being put in place, with some fearing that the changes are not going far enough to prevent another collapse.

Argentina has been prey to the boom and bust cycle before. The boom of the early 1990s, presided over by Carlos Menem during his first term went horribly wrong during his second term. Chronic overspending forced Argentina into the biggest ever debt default in late 2001, when it pulled out of repayments on loans totalling $140bn. The people have borne the brunt of the suffering inflicted by desperate economic measures, including the devaluation of the peso and despised controls on withdrawing their savings from the banks. Poverty is still rife as the people wait for the improvements to feed through to the ordinary Argentines. The peso has gained about 18% against the dollar so far this year, but is still 65% down lower than at the time of the devaluation in January 2002.