The US Treasury’s tendentious interpretation of the IMF’s External Balance Approach this week found a 4.7 % undervaluation of Vietnam’s currency.  It may pave the way for the US Commerce Department to impose countervailing duties (in a case involving the tire market), for the first time in a currency case. See Mark Sobel’s useful update of August 27. The Treasury claimed to find undervaluation despite small Vietnamese current account surpluses and fx reserves equal to only four months of imports. This finding is an ominous step in a predictably misguided US movement to use allegations of trading partners’ currency manipulation to justify protectionism.