The South Korean won has posted the strongest appreciation among 20 major currencies in the third quarter, gaining 15.41% against the dollar from 1,559.9 won on July 1 to 1,344.1 won by Sept. 11. The increase was roughly three times the Japanese yen’s 5.84% rise, while the Dollar Index was almost unchanged. Export-company dollar selling, sharply reduced foreign equity outflows and a narrower South Korea-U.S. interest-rate gap have supported the rally. The won-dollar rate briefly fell to 1,334.6 won on Sept. 9 before rebounding to 1,349.9 won on Sept. 11 as Middle East tensions lifted oil prices and revived concerns about U.S. inflation and interest rates. Average daily exchange-rate volatility reached 67.8 won, increasing the risks for importers, exporters and corporate hedging. The move also improved the relative performance of currency-hedged South Korea-listed U.S. equity ETFs and benefited products positioned for a lower dollar-won rate, while unhedged and dollar-advantage products lagged. Markets were focused on the Federal Reserve’s Sept. 15-16 meeting and the Bank of Japan’s expected policy move, with analysts divided between a short-term won pullback and continued medium-term appreciation.