The elderly bosses of the local exchange spent their afternoons in long lunches followed by a good nap. La Cite still isn't exactly Wall Street. When Mexico devalued the peso in December 1994, investors worried that Argentina would be forced to do the same, and they yanked their money out of the country. But in order to get big rates of return, you took substantial illiquidity risks. Analysts say the Merval's rise reflects the country's current strong economic performance.
Exports are booming, inflation is at a historic low and investment rates are strong.
The direct link between the Argentine and U.S. markets dates back to 1991, when President Carlos Menem made the peso freely convertible into dollars, effectively ceding control over his nation's monetary policy to the U.S. Federal Reserve in a bid to end frequent and debilitating bouts of high inflation. Convertibility reduced inflation to single digits. And, together with an ambitious privatization program, it gave a new lease on life to the Bolsa, as the stock market here is known. The exchange, which operates out of a sumptuous Belle Epoque building in the heart of La Cite, had once been Latin America's foremost market. But five decades of erratic economic policies had reduced it to a bit player in Argentina's financial drama.