Wealthy TBEN have adopted a new strategy to secure their income in the wake of the Covid-19 pandemic.
According to data from the Central Bank of Kenya (CBK), the rich are protecting their income instead of seeking new investment opportunities.
This led them to accumulate a record Ksh 33.8 billion in two months in term deposits in an effort to secure their wealth.
Central Bank of Kenya (CBK) building in Nairobi.
Reports also indicate that the wealthy have shifted from deposits in foreign accounts to fixed accounts in local currency.
CBK data showed that the wealthy opted for local accounts because they earned an average return of 6.3%.
In addition, deposits in foreign accounts fell by Ksh 34.6 billion.
The main reason for this change has been attributed to economic disruption caused by the Covid-19 pandemic which has led the wealthy to seek safer measures to secure their incomes.
In addition, the market posted a rise in the Kenyan shilling against the US dollar – attributed to new funds received from the International Monetary Fund (IMF) as well as economic measures taken by the government to avert a major crisis. .
“The decline in dollar deposits shows greater confidence in the underlying strength of the Kenyan shilling, especially given the recent funding deal with the IMF,” Ronak Gadhia, director of Sub-Saharan Banks, told media.
According to data from the CBK, the shilling traded on average at Ksh 107.42 in May to the dollar, up from Ksh 109.73 in March and Ksh 110.59 in December.
Initially, a previous survey had shown that the Kenyan shilling would remain weak against the dollar, leading a large number of investors to choose not to seek investment opportunities.
However, once the shilling remained stable, the wealthy resorted to transferring their income to term deposits.
Kenyan currency banknotes.