This archive report was first published on 24 December 2019.
Kenya's foreign currency deposits have reached a record high of Sh625 billion in October, according to the Central Bank of Kenya. This surge is attributed to increased diaspora remittances and a strengthening shilling, which reached a six-month high of 100.71 against the dollar.
As of June, the value of foreign currencies held in local banks had peaked at Sh600 billion, largely due to increased diaspora remittances. About Sh30 billion was brought into the country during the month, working out to an average of Sh1 billion a day.
Foreign currency deposits increased by three per cent from Sh607.4 billion in September, according to the latest data from the CBK. However, export earnings have been stagnant, with the trade balance deteriorating to Sh108 billion in October.
President Uhuru Kenyatta noted in his Jamhuri Day speech on December 12 that diaspora remittances grew by 10.9 per cent from Sh266.19 billion to Sh295.32 billion between June 2018 and June 2019, overtaking earnings from export of tea and coffee as the country's largest source of foreign exchange.
Meanwhile, currency outside of banks increased by Sh19.2 billion from Sh157.7 billion to Sh176.9 billion in October as Kenyans began to withdraw money from their accounts in preparation for the festivities.
CBK Governor Patrick Njoroge had hoped the demonetisation exercise would lead to a more cashless economy, but about Sh7.4 billion worth of the condemned notes did not find its way into the banking system for destruction.
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