2 percent of NDA) due to higher than-expected demand for currency, mostly driven by the financial transactions tax on non-filers of income tax returns and strong precautionary demand
for liquidity in advance of the Eid holidays in early July.
The choice of the data range is explained through two criteria: i) the availability of the data and, ii) we choose this range because it includes major economic crisis and political events (4) corresponding to two type of oil shocks: aggregate demand-side oil price shocks and precautionary demand
can be driven by sectors of the energy industry that have a direct use for crude oil, such as those involved in the refining business.
However, the spot began to pick up during the fourth quarter, as OPEC supply fell and geopolitical tensions rose, leading to a buildup in precautionary demand
Fourth, inter-bank markets were significantly impaired because of the precautionary demand
for liquidity of banks exposed to rollover risks.
This precautionary demand
is currency substitution.
the usual reason for insurance purchases), whereas prudence gauges the precautionary demand
Thus, precautionary demand
for savings falls--current consumption is higher.
In other words, this "M1 problem" is simply a result of the fact that an increase in the precautionary demand
for money can be satisfied by either an increase in demand for M1 or an increase in demand for NM1M2 (and perhaps NM1M3).
On the global level, the current stock-to -sue ratios for corn and soybeans are lower than they were during 2007 -08, but are higher for rice and wheat, Many regions have undertaken self-sufficiency initiatives to reduce their dependence on global food market, and some regions increased their precautionary demand
for key grains to mitigate food price increases while others initiated food and fertilizer subsidies and farm lending programs.
Uncertainty regarding the level of international reserves also encouraged a precautionary demand
for gold and dollars, putting significant depreciation pressures on the exchange rate, it said.
Limited Access to International Financial Markets and the Precautionary Demand
for International Reserves by Developing Countries