Speculative demand for money is inversely related to rate of interest i.e. higher the rate of interest, smaller will be speculative demand for money and vice versa. Therefore curve of speculative demand for money is downward sloping to right. There is two situations:
(i) If market rate of interest is very high and expected to fall in future (i.e. rise in price of bond) thereby anticipating capital gain from bond-holding, people will convert their money into bonds. Thus speculative demand for money is low.
(ii) On the contrary if rate of interest is low and people expect it to rise in future (i.e. fall in price of bond) anticipating capital loss from bond-holding, people convert their bonds into money in order to avoid future capital loss. They hold up money balance thinking that income from non-monetary assets like bond will be low and so the cost of money holding will also be low.