Following Calvo and Reinhart (2002), it has become commonplace to argue that there is a “fear of floating” among emerging economies in Asia and elsewhere. However, the sustained reserve build-up in emerging Asian economies since 2000 until 2008 (with the onset of the global financial crisis) suggests that they are more sensitive to exchange rate appreciation than depreciation. Indeed, a massive body of work has focused on trying to rationalise the causes and consequences of reserve build-up in emerging Asian economies and elsewhere especially since 1998. Apart from valuation changes due to currency composition of reserve stocks, the three main rationales often suggested for reserve accumulation are insurance (i.e. preventing a crisis), mercantilism (i.e. stimulating growth), and reducing exchange rate volatility. The last rationale (i.e. managing exchange rate volatility), while often used by central bankers, is unconvincing as it should imply that, on average, international reserves do not change much. The fact that reserves are being accumulated on a sustained basis suggests that intervention has involved more that just minimising exchange rate volatility.