LEADER SAYS MEXICO WON'T TWEAK PESO

Mexican President Felipe Calderon warned Thursday of the dangers of
currency manipulation by emerging economies, saying his government had
no plans to join the growing trend.

He also pledged he wouldn't back down from a crackdown on drug
traffickers that has sharply raised the country's murder rate.

In an interview with The Wall Street Journal at a meeting of the World
Economic Forum in Davos, Mr. Calderon said Mexico respected market
judgments and wouldn't intervene to try to depress the value of its
currency.

Countries including China, Brazil and Turkey have taken measures to
keep their currency values lower or to stop capital inflows.

"We are not intervening, we are not establishing taxes to do this, we
are not manipulating the currency," he said.

He said he had concerns about the growing number of countries
intervening in this way.

"Of course we have a concern....In my opinion, the state interventions
in currency markets sooner or later become too dangerous for a
country," he said.

The Mexican peso has appreciated against other currencies, but the
authorities haven't faced the waves of capital experienced by
countries such as Brazil and Turkey.

One reason is that Mexico's interest rates of about 4% are roughly the
same level as inflation, and are lower than many other emerging economies.

Mr. Calderon pledged he wouldn't let up on a crackdown on drug
traffickers that has led to a sharp jump in homicides, to more than
15,000 last year.

He said he believed the country had passed an "inflection point" in
2010, with drug-related killings beginning to fall from the middle of
the year.

This followed a pattern seen when traffickers were confronted in
Colombia-but in much less time, he said.

Twenty out of 37 drug kingpins had been imprisoned or killed since the
government put out a "Most Wanted" poster two years ago.

He said this had caused instability and violence within drug
gangs.

"The gangs are becoming weaker, they are losing capacity of maneuver,
and losing capacity of leadership. That's part of my duty. Of course,
I'd like to do the duty without the secondary impact" of a high murder
rate, he said.

"For me, there is no choice. The duty is to fight crime particularly
organized crime, otherwise they will take control of the important
parts of the government or important parts of the country. So we'll
act on time to fix the problem. The alternative doesn't exist," he
added.

Homicides were in localized areas and most victims were other
criminals, he said, adding that some Mexican cities had lower crime
rates than U.S. cities such as Washington, Pittsburgh and New Orleans.

Asked about immigration, the touchiest topic in U.S.-Mexican
relations, the president said he hoped there would be a renewed effort
to find a solution for the millions of Mexican immigrants "who are
providing services to the American economy."

Anti-immigrant sentiment stemmed from the economic crisis, he said,
but Congress and the American people needed to be convinced that
immigration was positive on an economic basis.

"The right solution is to create job opportunities for Mexican people
in Mexico. And we are doing exactly that," he said.

However, he suggested the political climate may still not be ideal for
new U.S. legislation, describing it as "very radical, very aggressive,
I don't want to say very violent."