Well-off individuals and companies banked a record Ksh63 billion ($527.8 million) more in dollar accounts in June as they searched for safety for the investments ahead of this week’s elections.
Central Bank of Kenya (CBK) data shows that foreign currency bank deposits held hit a historic high of Ksh891.5 billion ($7.4 billion) in June, up from Ksh829.5 billion ($6.9 billion) in May, making it the biggest monthly jump on record.
The Ksh63 billion ($527.8 million) increase in dollar deposits, equivalent to Ksh2.1 billion ($17.5 million) daily, is an indication that rich individuals and big companies sought a safe haven for their wealth in the wake of uncertainty linked to the polls.
The elections have largely been peaceful so far in a country where street protests and clashes usually only follow result announcements.
The extra Ksh63 billion ($527.8 million) in dollar deposits reflected a 7.6 percent increase and shows that the jump was not influenced by the strengthening of the greenback against the shilling, which shed 1.7 percent against the US currency in June.
“The jump is big so I would not attribute it to the weakening of the shilling but rather hard currency conversions as we moved towards the elections with the risk of a protracted election in mind like was witnessed in 2017,” said Churchill Ogutu - Economist IC Group.
“The jump also coincided with the Fed rate hike so some speculators may have been angling to make some gains from the strengthening of the dollar.”
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