Kenyans Withdraw Sh210 Billion in Foreign Currency Deposits Amid Shilling’s 20% Surge

Kenyans significantly reduced their foreign currency-denominated deposits in commercial banks by Sh210 billion between January and July, as the shilling appreciated by over 20 percent against major global currencies, including the US dollar.

The latest data from the Central Bank of Kenya (CBK) shows that foreign currency deposits held by locals dropped 13 percent, falling to Sh1.39 trillion from Sh1.6 trillion at the start of the year.

This period coincided with the strengthening of the Kenyan shilling, which rose from an exchange rate of Sh161 per dollar in January to Sh128 per dollar in July. The appreciation reflects a lower demand for foreign currencies as the shilling gained value.

Last year, the shilling depreciated by over 31 per cent, pushing Kenyans to hedge their savings using stabler foreign currencies such as the US dollar. Over the year, foreign currency deposits rose from just Sh946 billion in January to over Sh1.5 trillion at the end of the year.

In a related development, portfolio investments by foreigners in Kenya saw a remarkable increase, jumping by 121 percent to Sh6.4 billion in June, compared to a negative Sh32.6 billion last year. This surge underscores growing investor confidence in the country’s economic prospects.