Within two months, rich Kenyans saved Sh. 34 billion in fixed deposit accounts in the country. This has been revealed by the latest data from the Central Bank of Kenya. The data shows that Kenyans saved Sh. 33.8 billion between May and March 2021, pushing the amount saved in fixed deposit accounts to a historic high of Sh. 1.567 trillion in May, up from Sh. 1.533 trillion in March.
In contrast, deposits in dollar based accounts fell by Sh. 34.6 billion. “The decline in dollar deposits shows more confidence in the underlying strength of the Kenya shilling, especially due to the recent financing deal with the IMF,” Ronak Gadhia, the director Sub-Saharan Banks at EFG Hermes, said.
According to a report that appeared in a local daily, fixed deposits have increased by Sh. 165 billion over the past one year. This increase is being interpreted as an indication that rich individuals are protecting their value and hedging rather than seeking new areas in which to invest their fortunes amid the ongoing economic fallout.
“The expected external inflows that were due beginning April and throughout the end of the second quarter were seen bolstering the shilling and depositors who anticipated this strengthening of the Shilling reduced their US dollar holdings,” Churchill Ogutu, the head of research at Genghis Capital, was quoted as saying.
The shilling started strengthening in April this year. This came as the market benefited from inflows that came from the government’s successful application for new debt financing from the International Monetary Fund. In April, Kenya secured $2.34 billion financing from the IMF.
For example, the Kenya shilling traded at an average of Sh. 107.42 in May per dollar. This was an appreciation from Sh. 109.73 that it traded in March and Sh, 110.59 which it traded in December 2020.