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Dollar deposits increase banks’ liability risk
Food purchases piled pressure on Kenya’s reserve of foreign currencies, taking close to 17.1 percent of the country’s total import bill. FILE PHOTO | SHUTTERSTOCK
The recent build-up of dollar deposits in local banks has left them facing renewed pressure on their capital buffers, due to a quicker rise in liabilities on account of the shilling’s depreciation against the dollar.
Dollar deposits count as liabilities for banks, while foreign exchange loans to customers fall on the asset side, similar to shilling loans and deposits.
