(Bloomberg) — Mexico’s peso outperformed its emerging-market peers on Thursday, as US Commerce Secretary Howard Lutnick praised the country for its cool response to President Donald Trump’s tariff roll-out.

The peso rose as much as 0.6% against the dollar before trimming gains. That jump helped a broader gauge of developing-nation currencies erase its losses and trade flat as of midday in New York. Eastern European counterparts were among the worst performers while the dollar edged higher and Treasury yields were little changed.

Lutnick, in a Thursday morning interview with Bloomberg Television, praised the UK and Mexico for refraining from engaging in tit-for-tat tariff hikes with the US, warning that those trading partners that upset Trump with their responses to American protectionist steps would open themselves to a severe reaction. Markets remain concerned about the possible impact Trump’s trade policies could have on economic growth following wild swings in asset prices in recent weeks.

“The British didn’t respond, the Mexicans didn’t respond — you have some countries that actually thoughtfully examine how they do business with us,” Lutnick said. For those nations that “go right back to old-school” tit-for-tat measures “the president’s going to deal with them with strength and with power.”

Mexico’s economy chief said the government is holding consultations with companies as it evaluates possible tools to face an April 2 deadline, helping the peso add to its gains.

Elsewhere in currency markets, central and eastern European currencies were among the biggest losers versus the greenback as an aid to Vladimir Putin said Russia wanted a long-term solution and not a temporary ceasefire in Ukraine.

Serbia’s central bank left the benchmark interest rate unchanged for a sixth month as price pressures persist and the government confronts the biggest political protests in a decade. In Romania, which is also facing continued political turmoil, inflation also unexpectedly edged higher last month.

In equity markets, emerging-market shares fell, driven by a slump in technology stocks in Asia, after hedge funds trimmed their bullish wagers in the region, having already dumped some bets in the US and Europe. 

The benchmark index for EM stocks dropped more than 0.4%, led lower by Taiwan Semiconductor Manufacturing Co., Alibaba Group Holding Ltd. and Tencent Holdings Ltd. 

“The recent selloff has been triggered by investor positioning where hedge funds have started reducing risk and realizing profits where they have them,” said Rajeev De Mello, portfolio manager at Gama Asset Management SA. “As we approach the end of the quarter and with more significant tariffs signaled for early April, I would expect a further deterioration.”

Goldman Sachs saw the largest decline in hedge fund positions in Asia in four years on Monday. While much of the fall came from developed countries, China dominated the reduction in emerging markets in Asia, led by hedge funds trimming bullish wagers, it added. 

In credit markets, Indonesia’s sovereign dollar bonds were among the worst-performers in EM, after officials there posted an unlikely budget deficit as of February due to a double digit drop in state revenues, adding to concerns about the health of government finances. 

–With assistance from Kerim Karakaya.

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