• Courses
  • Job
    • Candidate Registration
    • Employer Account
  • Events
  • Blogs
    • Kutambua Digital Prospectus
    • Scholarships
    • Newsletters
  • Contact
  • Login/Register
    Kutambua.com
    • Courses
    • Job
      • Candidate Registration
      • Employer Account
    • Events
    • Blogs
      • Kutambua Digital Prospectus
      • Scholarships
      • Newsletters
    • Contact
    • Login/Register

      Blog

      Wealthy Kenyans bank Sh45bn in lockdown dollars during Covid-19

      • Date 16/07/2020

      Central Bank of Kenya (CBK) data shows that foreign currency bank deposits held by Kenyans hit a historic high of Sh671.4 billion.

      Rich individuals and big companies, seeking a safe haven for their wealth, stockpiled a record Sh45.5 billion in dollars in the three months to May when Kenya imposed restrictions to curb the spread of Covid-19.

      Central Bank of Kenya (CBK) data shows that foreign currency bank deposits held by Kenyans hit a historic high of Sh671.4 billion, up from Sh625.9 billion in February, one of the largest three-month jumps.

      This is an indication that the wealthy are protecting their value and hedging rather than seeking new areas in which to invest their fortunes.

      The rise in foreign currency bank deposits emerged in a period when Kenya announced its first Covid-19 cases and imposed tough restrictions, including a dusk-to-dawn curfew.

      Demand at home and in export markets slumped as consumers stayed indoors to avoid catching the virus and because of government containment measures, forcing firms and the rich to freeze investments plans.

      The CBK says that bankers and firms had informed it via a poll that investors were hoarding dollars for speculation purposes in the wake of forecasts showing that the shilling would remain weak against the US currency.

      Analysts are of the view that the rush to buy dollars is part of 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 reckons 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 dollar has been strengthening against all emerging market currencies and Kenya is not spared. Some of our main dollar inflows were hit quite hard over the last three months.”

      The shilling opened Wednesday at Sh107.29 units against the dollar, matching the all-time low recorded on April 30. This is in contrast with the average of 101.87 units to the dollar in February. A reduced inflow of hard currencies after the coronavirus outbreak has hurt the shilling due to low inflows from farm exports and tourism.

      A slowdown in business activities and the uncertain future caused by the virus have forced many companies and rich investors to hold onto cash, leading to a pile-up in bank accounts.

      Low returns from a bearish stock market and a slump in real estate have also seen the rich opt to keep cash in banks and tap interest returns that stood at 7.01 percent in April.

      While companies see the money in banks as a buffer against hard times, it has long riled investors, who say executives should invest it for growth or return it to shareholders.

      The dollar has become the currency of choice for worried investors because the US economy is seen as the most sheltered should the virus damage the global economy.

      The government expects the economy to grow by less than 2.5 percent this year, compared with a pre-pandemic forecast of about six percent, due to the impact of the disease.

      But private sector activity in Kenya grew in June thanks to reduced curfew hours and the relaxation of lockdowns in Europe that boosted demand for exports, showed a survey by Stanbic Bank.

      On July 6, Kenya announced a phased reopening of the country, lifting restrictions on travel in and out of Nairobi and Mombasa and allowing air travel to resume. This looks set to rev up business activity.

      • Share:
      author avatar
      Admin 2

      Previous post

      UK offers work permit to non-graduate Kenyans
      16/07/2020

      Next post

      New Auditor-General declares Sh30.89m wealth
      16/07/2020

      You may also like

      12 May, 2022
      Please enable JavaScript in your browser to complete this form.Username or Email *Password *Forgotten your password?Remember meRemember meLogin
      employability+nottingham
      Employability and Wellbeing Programme
      19 April, 2022
      AR-WPD-Community-Matters-Fund-Mental-Health-Digital-Assets-R-26035-ARTWORK-15
      Community Matters Fund
      19 April, 2022

      Leave A Reply Cancel reply

      You must be logged in to post a comment.

      Categories

      • Blog (84)
      • Job Support (8)
      • Masters and Postgraduate (37)
      • News (3)
      • Other Opportunities (19)
      • PhD and Postdoctoral (28)
      • Scholarships (263)
      • Tips and Guidelines (2)
      • Training (8)
      • Undergraduates and Bachelors (43)

      Jobs

      • Find a Job
      • Full time jobs
      • Part time jobs
      • Temporary jobs
      • Volunteering jobs
      • Internship jobs
      • Help in Finding a Job
      • Employer Account
      Facebook-f Twitter Instagram Whatsapp Linkedin Envelope

      Courses

      • Agriculture & Environment
      • Building & Engineering
      • Business & Management
      • Creative Arts & Media
      • Education & Development
      • Health & Social Care
      • Hospitality and Leisure
      • Languages
      • Law & Humanities
      • Mentoring
      • Science, Technology and Maths
      • Find a course

      About Us

      • Events
      • Scholarships
      • Our Blog
      • Current Opportunities
      • Reading
      • Become an Instructor
      • Employers
      • About Us
      • FAQs
      • Contact Us
      • Enquiry Form

      Legal Stuff

      • Privacy policy
      • Cookies Policy
      • Terms of Use
      • Child Safety
      • Accessibility Policy

                                                                                                                        © Kutambua 2013-2022|Website by Mojatu Media

      Back to top