Kenyan companies and wealthy households are holding about Sh1.52 trillion in foreign-currency accounts at local banks, after adding more than Sh240 billion in a year, as they hedge against global economic shocks and uncertainty ahead of the 2027 General Election.

Data from the Kenya National Bureau of Statistics (KNBS), reported by Business Daily on Monday, show that deposits held in dollars, euros and pounds rose by Sh240.57 billion over the past year, the largest annual increase in several years.

The build-up has come even though the shilling has been remarkably stable. The local currency traded at about Sh129.91 to the US dollar on October 22, barely changed for months, according to Central Bank of Kenya (CBK) figures reported by The Kenya Times. Official foreign exchange reserves stood at about $14.69 billion, enough to cover 5.9 months of imports.

Companies hold the bulk

Corporates account for the largest share of the money. At the end of December 2025, companies held Sh957 billion, or 71.3 per cent, of foreign-currency deposits, while households held Sh386 billion, or 28.7 per cent, according to CBK data cited by Business Daily.

Nahashon Mungai, executive director for global markets at SIB, told the paper that the largest holders include money remittance firms, agricultural exporters, travel and tourism businesses, foreign-owned companies and public entities that bill in dollars. He said they mainly use the deposits to match their cash flows and to build up money for dividend payments, adding: "There is no return advantage in holding foreign currency."

Many businesses also remember the dollar shortage of 2023, when importers struggled to find hard currency to pay for raw materials, fuel and machinery. Kenya depends heavily on imported fuel and industrial inputs.

"For corporates, the incentive is to be able to settle supplier costs which are often in dollars," said Ken Gichinga, chief economist at Mentoria Economics.

Defensive mood

Analysts say the rise reflects a cautious mood. Melodie Ndanu, a research analyst at SIB, said both corporate and retail depositors are "adopting defensive strategies against shifting economic conditions", with households likely "treating forex deposits as a wealth-preservation shield."

She said firms are taking a "wait-and-see" approach, delaying investment decisions and holding on to cash until the policy direction becomes clearer in the run-up to the election.

Global factors are adding to the caution. Inflation linked to tensions in the Middle East has pushed up oil prices, and the US dollar is expected to stay strong because of high American interest rates. Ndanu noted that higher US rates could raise demand for dollars, and firms may be positioning for that, while Gichinga cautioned that rising global rates could trigger capital flight and put pressure on the shilling.

Below the 2024 peak

The current level is still below the roughly Sh1.6 trillion that Kenyans held in foreign-currency accounts in January 2024, when the shilling slid to its weakest level on record before a sharp recovery, the Daily Nation reported at the time. Holdings fell as the shilling strengthened, dropping to about Sh1.26 trillion by December 2024, before climbing again.

Diaspora inflows, a key source of dollars, have been mixed. Remittances rose 6 per cent to $451.8 million in August from a year earlier, but were down 1.3 per cent to $5.01 billion over the 12 months to August, according to CBK data.

Investors have long criticised companies for hoarding cash in foreign-currency accounts instead of investing it in expansion or returning it to shareholders. With the election campaign intensifying and global risks unresolved, the analysts' comments suggest the appetite for dollar savings is unlikely to fade soon.

Photos: The Kenya Times; Dennis Onsongo / Business Daily