As the 2022 General Elections inched closer, rich Kenyans increased their dollar transactions to safeguard their liquid assets against the economic impact of the election.
Data from the Central Bank of Kenya (CBK) shows that Sh. 63 billion more was deposited in dollar accounts in June alone.
This saw foreign currency bank deposits held hit a historic high of Sh. 891.5 billion in June, up from Sh. 829.50 billion in May. This increase was the largest in history.
The Sh. 63 billion increase in dollar deposits translated to Sh. 2.1 billion daily. It was an indication that rich individuals and big companies sought a safe haven for their wealth in the wake of uncertainty linked to the August polls.
Notably, these increased savings came at a time when the country was facing low market confidence on the availability of the US dollar.
Within this period also, the Kenya shilling weakened from Sh. 117 to the current market price of Sh. 119 to the US dollar.
“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,” Churchill Ogutu, an Economist at IC Group, was quoted by a local business newspaper.
“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.”