Cash saved by Kenyans in foreign currencies at local commercial banks rose to Sh803.6 billion in December last year, marking the first time the figure has crossed the Sh800 billion mark.
Data released by the Central Bank of Kenya (CBK) shows that foreign currency savings grew 8.5 percent to Sh803.6 billion in December 2021 compared to Sh740.6 billion a year earlier.
Analysts said depositors were accumulating the hard currencies as a hedge against the depreciating shilling which has been under pressure since May last year.
“Global tensions, uncertainties and increased volatility in the global markets are being seen as the main drivers leading people to hard currencies,” said Ken Minjire of stock broker AIB-XYS.
Some of the rises could be as a result of the shilling depreciating since CBK reports the foreign deposit values in the local currency, according to Melodie Ndanu, a research analyst at Genghis Capital.
The shilling, now trading at an all-time low of 113.65 units to the dollar, has declined 5.19 percent from the 107.75 seen in May last year and which was its strongest point was during the Covid-19 pandemic era.
High demand for hard currencies by importers has outweighed foreign inflows generated by diaspora remittances, exports, and key sectors such as tourism, resulting in the weakening of the shilling.
Dollar savings by residents grew at a record pace of Sh121 billion in 2020 mainly due to the pandemic woes as people all over the world fled from the frontier and emerging market currencies that were depreciating faster given to the relatively weaker nature of their economies.
On the flip side, the slower growth in foreign currency savings last year compared to 2020 points to a stabilising economy and growing confidence after a tough pandemic period.