In December 2020, Sh233.7 billion cash circulated in consumers’ pockets and big businesses.
Data derived from the Central Bank of Kenya shows that the value of the Kenyan currency has resiliently risen despite the Covid-19 pandemic for three months consecutively, following the toning down of the restrictions put in place earlier in the year 2020.
The Sh8.8 billion sharp increase in money supply recorded from November 2020, therefore, means that the December level crushes the previous record of Sh230 billion seen in December 2018.
The cash in circulation constitutes monetary assets in liquid form in bulk held by individuals and big businesses.
The data obtained also show that demand deposits — cash available for withdrawal in banks — decreased by four percent (Sh62 billion) from Sh1.448 trillion in November to Sh1.386 trillion in December.
This means that people were seeking to have their money within easy reach to spend during the Christmas and New Year period as well as the complete re-opening of schools.
The returns on bank deposits and savings fell to a five-year rock bottom of 6.2 percent and 3.42 percent respectively.
Despite the shrinking economy during the second and third quarter of 2020 and thousands of people being retrenched, most benchmarks have indicated a brighter future ahead for Kenya.
“Leading indicators for the Kenyan economy point to a recovery, supported largely by strong performance in agriculture, construction, resilient exports and continued recovery in manufacturing and services sectors,” the CBK Monetary Policy Committee (MPC) said in a statement three weeks ago.
“The economy is expected to rebound strongly in 2021, supported by the service sectors particularly education, manufacturing, and the ongoing policy support through the government’s economic recovery plan.”