According to data from the Central Bank of Kenya (CBK), the wealthy are protecting their earnings as opposed to seeking new investment opportunities.
This has led them to pile a record Ksh33.8 billion in two months in fixed deposits in a bid to secure their wealth.
Reports also indicate that the wealthy have shifted from depositing in foreign accounts to local currency fixed accounts.
CBK data showed that the rich opted for local accounts as they earned an average return of 6.3 percent. Further, the deposits from foreign accounts dropped by Ksh34.6 billion.
The major reason for the shift was attributed to the economic disruptions caused by the Covid-19 pandemic which led to the wealthy seeking safer measures of securing their earnings.
Further, the market exhibited a rise in the Kenyan shilling against the United States dollar – attributed to the new funds received from the International Monetary Fund (IMF) as well as the economic measures employed by the government in order to prevent a major crisis.
“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, director at Sub-Saharan Banks informed the media.
According to the CBK data, the shilling traded at an average of Ksh107.42 in May per dollar- a rise from Ksh109.73 in March and Ksh110.59 in December.
Initially, an earlier survey had depicted that the Kenyan shilling would remain weak against the dollar, which led to a huge number of investors opting not to seek investment opportunities.
However, after the shilling remained stable, the wealthy resorted to shifting their earnings to fixed deposits.