An uptick in the demand for currency (indicated by a leftward shift in the reserves demand curve) prompts increased customer withdrawals from banks. Consequently, banks experience a reduction in reserves below their preferred levels at the prevailing interest rate. In response, banks may intensify competition in the reserves market, causing the overnight interest rate (r) to rise. This higher interest rate incentivizes banks to retain reserves rather than extending loans, aiding in the restoration of equilibrium in the reserves market. In essence, the shift from deposits to currency heightens reserves demand, leading to an upward push on the overnight interest rate as banks strive to uphold desired reserve levels