The value of currency outside banks increased by Sh3.2 billion in March but still remained well below the Sh230.8 billion peak hit at the beginning of 2019 as more people opted to use digital payments due to the Covid-19 outbreak.
Data from Central Bank of Kenya shows the money in circulation in the month rose to Sh198.3 billion compared to Sh195.1 billion in February.
The slight increase corresponded with a 1.79 percent or Sh23 billion increase in demand deposits — money held in checking or current accounts — to Sh1.306 trillion.
"What observers should keep an eye on is demand deposits in banks (Sh1.3 trillion) in the Covid-19 pandemic era. As households and corporates remain fretful of the uncertain environment, this pushes up precautionary savings which is supportive of demand deposit growth," said Genghis Capital head of research Churchill Ogutu.
The money in people’s hands is expected to dip further in the second quarter, with Kenyans turning significantly to mobile payments as a precautionary measure to prevent the spread of Coronavirus through handling cash.
There has also been an increase in foreign currency deposits, which rose to Sh642 billion in March from Sh626 in February.
This is due to uncertainty in the economy, which makes people who trade in foreign currency look to hedge against possible exchange rate depreciation.