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The United States Federal Reserve isn't the only central bank raising interest rates in response to Trump.

Mexico's central bank on Thursday raised its benchmark interest rate for the fifth meeting in a row, hiking rates by 25 basis points to 6.50%. The rate increase is less aggressive than recent ones -- the bank has previously raised rates in 50-basis-point increments -- and signals modest confidence in the Mexican peso that has rebounded thanks, in part, to lessening anxieties over the Trump administration's attitude towards Mexico.

"The central bank president isn't going to tell you explicitly that that's the case, but the ties are there," said Alejo Czerwonko, director of emerging markets investment strategy at UBS. "The fact that the Trump administration has been less hawkish vis-a-vis Mexico in the last few weeks has helped the peso. And therefore, it makes the life of the central bank easier."

The Mexican peso took a hard hit in the wake of Trump's election as investors got nervous over his rhetoric on immigration and trade. The peso tumbled 10% from Election Day through the end of 2016 and an additional 5% during the first week of this year. But since mid-January, it's been on the rise and is one of the best-performing currencies of the year.

"The currency is behaving a lot better," said Czerwonko.

The peso's good behavior is one reason behind the Mexican central bank's decision to raise rates a little less aggressively than it has in the recent past. Mexico's central bank has raised interest rates by 325 basis points since the end of 2015.

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"The peso depreciation started at the end of 2014 and aggravated in 2016 when Trump's presidential possibilities increased," said Alfredo Coutino, Latin America director at Moody's Analytics. "However, monetary policy only started to react until the end of 2015 and particularly in 2016."

Also driving Mexico's rate hike is inflation.

Consumer prices in Mexico have risen significantly since the start of 2017, when the government made a major adjustment to fuel prices to catch up after years of accumulated lags. As a result, private prices have been realigning, with inflation going from an annual rate of below the 3% target (2.5% in March 2016) to 5.3% in mid-March of this year, Coutino said.

"In an effort to anchor expectations and consequently retake control on inflation, the central bank has been tightening monetary policy more aggressively since the beginning of 2016," he said.

Last week, central bank chief Agustin Carstens said the peso's recovery will help inflation cool back toward 3%, reports Reuters, while also suggesting the peso could gain more ground.

To be sure, Trump is a volatile figure, and there is no telling how his administration's stance on Mexico will evolve in the weeks and months to come. The Wall Street Journal reported this week that the White House is seeking largely modest changes to NAFTA, with one exception -- tariffs. Its proposal calls for allowing a NAFTA country to reinstate tariffs in case of a flood of imports that cause "serious injury or threat of serious injury" to domestic industries. A tariff could definitely rock the peso if implemented.

"With Trump's threats about trade, investment, and immigration, the peso has been dancing constantly and with very few breaks," Coutino said.