Foreign exchange market intervention and reserve accumulation in emerging Asia: Is there evidence of fear of appreciation?

► We conjecture that Asian exchange rate regimes in the 2000s can be more precisely described as being a "fear of appreciation" rather than "fear of floating". ► We test this conjecture for six emerging Asian economies which are known to operate a variety of managed floats, viz., India, Korea, Philippines, Singapore, Thailand and Indonesia using monthly data for 2000:m1-2009:m7. ► Our results confirm the existence of an asymmetry in central bank foreign exchange market intervention responses in selected Asian economies. ► Asian central banks appear to react more strongly to exchange rate appreciations than depreciations and they react more to nominal effective exchange rate (NEER) changes than to bilateral US dollar exchange rates.