This archive report was first published on 16 July 2020.
On July 16, 2020, Central Bank of Kenya (CBK) data revealed that foreign currency bank deposits held by Kenyans hit a historic high of Sh671.4 billion.
This marked a significant increase from Sh625.9 billion in February, one of the largest three-month jumps.
The surge in foreign currency bank deposits was largely attributed to wealthy individuals and big companies seeking a safe haven for their wealth during the Covid-19 pandemic.
According to CBK data, the three months to May saw a record Sh45.5 billion in dollars stockpiled by Kenyans, as the country imposed restrictions to curb the spread of the virus.
Analysts attributed the rush to buy dollars to a global trend in response to the rapid spread of the coronavirus, which has sent investors to the safety of the greenback.
Head of fixed income at Genghis Capital Kenneth Minjire noted that the weakening of the shilling has strengthened the stature of the dollar as individual savers and companies seek the greenback to protect their money.
“People feel safer holding foreign currency instead of the shilling in this situation. This has been a key contributor to the rising stock of foreign currency deposits,” said Mr Minjire.
The shilling opened at an all-time low of Sh107.29 units against the dollar on July 15, 2020, matching the low recorded on April 30.
