High-net-worth Kenyans resort to stockpiling dollars to Ksh625.9 billion as coronavirus pandemic bites

Dollars. [Photo courtesy]

Stockpiled dollars by high-net-worth Kenyans and investors operating in Kenya have hit a record high of Ksh625.9 billion in a rush move inspired by coronavirus pandemic on the economy.

The Central Bank of Kenya in a new set of data reveals that there was a jump of Ksh14.7 billion in foreign currency bank deposit all held by Kenyans in February. They have applied brakes on investing and chosen to seek a haven for their wealth as the shilling continues to weaken against the currency.

A currency trade banker told Business Daily that the rush to buy dollars is “part of a global trend and investors are preferring to hold cash when they are scared about future prospects.”

Experts argue that the dollar is the best alternative in the global market which explains why wealthy Kenyans and investors have been buying the dollar.

With nothing much going on in terms of investments, the wealthy have stockpiled millions of funds in bank accounts which CBK says has further contributed to the decline of the shilling against the dollar.

In January and February, the shilling traded at Ksh101.87 but has sunk to Ksh106 against the dollar.

“Respondents cited lower export earnings, panic selling of stocks at the stock exchange, capital flight, speculative hoarding of US dollars and external debt obligations as reasons for the expected weakening of the shilling,” CBK said.

Main sources of foreign exchange such as tourism employing many in the service industry including airlines have been crippled by the pandemic further denying the country an investment footing.