Remittances from Kenyans in the diaspora declined by Sh2.3 billion in January, totaling $427.4 million. This decrease is attributed to the stable exchange rate of the Kenyan shilling against the dollar, which complicates remittance decisions. Despite this drop, the total inflow for the past year shows a 16.6% increase, with the US accounting for over half of the remittances.
In January, remittances from Kenyans in the diaspora were reduced by Sh2.3 billion, highlighting a challenging environment for individuals deciding to send money home due to a stable exchange rate of 129 shillings per US dollar. This decrease is evident as reported by the Central Bank of Kenya (CBK), with inflows totaling $427.4 million (Sh55.2 billion), compared to $445.4 million (Sh57.6 billion) in December 2024.
Despite this decline, the January figure showcases a 3.6 percent increase compared to January 2024 when remittance inflows amounted to $412.4 million (Sh53.3 billion). Over the past twelve months, cumulative inflows have increased by 16.6 percent, reaching $4,961 million (Sh641.1 billion), compared to $4,253 million (Sh549.6 billion) during the same timeframe in 2024.
The United States remained the predominant source of remittances, accounting for 53.2 percent of the total inflows during this period. The stability of the Kenyan shilling, which has held firm against the dollar at an average rate of 129 for six months, complicates decisions for diaspora Kenyans on whether to send money home or not.
Research by Western Union indicates that a significant majority, about 67 percent of Africans abroad, tend to send more money when their local currency weakens against the dollar, while 65 percent of recipients report receiving more funds during such times. The consistent exchange rate of the shilling against the dollar restricts the advantageous leverage diaspora members typically utilize when remitting funds.
As of the end of January, the CBK quoted the shilling at 129.22. This figure represents a 19 percent gain against the dollar compared to the same period last year, where the shilling averaged 160. Thus, the purchasing power of $100 sent by diaspora Kenyans in January 2025 is significantly diminished, evaluated at 19 percent less than the prior year.
In conclusion, January saw a notable reduction in remittances from Kenyans abroad, primarily attributed to the stable exchange rate of the Kenyan shilling against the US dollar. Despite the decline in monthly inflows, there remains a year-on-year increase in cumulative remittances. The US continues to be the largest contributor to these funds, but diaspora Kenyans face challenges in decision-making due to the current thresholds of foreign exchange value. This situation implies a cautious approach from the diaspora when dispatching funds home.
Original Source: eastleighvoice.co.ke
