In just three months – from May – Kenyan wealthy elites have stockpiled Ksh45.5 billion in dollars at a time when the economy is in turmoil due to COVID-19 pandemic.
Data by the Central Bank of Kenya indicated foreign currency bank deposits held by Kenyans hit a record high of within this period Sh671.4 billion, up from Sh625.9 billion in February.
With an almost repressing economy, the wealthy who invest in multimillion investments have taken the protection route other than taking a gamble with investment as the pandemic continues.
For Kenya, every sector almost came to a halt since mid-March when a lockdown was imposed. This was in a bid to tame the further spread of the virus which forced the private sector to hold back on further investment plans.
CBK data also indicated that investors had made formal communication of their intention to freeze on future investment and hoard dollars as the shilling continues to take a beating against the dollar.
Buying of dollars, analysts indicate, has been viewed as a safety box by investors not only in Kenya but the rest of the world.
According to Business Daily, Head of fixed income at Genghis Capital Kenneth Minjire offered that the weakening of the shilling has strengthened the dollar as individual savers and companies seek the safety 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 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.”
On Wednesday, the Kenyan shilling traded at Ksh107.29 against the dollar which is a three-month low since April.
Before the pandemic, the shilling traded at Ksh101.87 against the dollar.
The dip is attributed to slow business activities caused by the pandemic forcing a stockpiling of dollars by the investors.
With Kenya’s partial reopening on July 6, the shilling is expected to gains some stability against the dollar.