McDonough Tuesday described the U.S. dollar as "a little overvalued" even after factoring in the stronger U.S. productivity growth trend. He expressed concern about the mounting current account deficit. "If you look at purchasing power parity, the dollar is somewhat overvalued," McDonough said. He added that one also has to factor in the stronger U.S. productivity growth trend in evaluating the exchange rate, but said "if you crank in productivity, on a theoretical basis the dollar is a little overvalued." "But the exchange rate can remain overvalued for a considerable period of time," he continued, adding "I don't see an alarm scenario coming from the current account deficit."