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Remittance Inflows Decline in February Despite Kenyan Shilling Being Bullish

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louis Buyisiwe

Mar 19, 2024

Kenya's Remittance Inflows

The depreciation of the US dollar against the Kenyan shilling is perceived as a potential factor for the reduced remittance volume in February. A stronger shilling reduces the relative value of dollar remittances, possibly influencing diaspora Kenyans to send less. This aligns with insights from Western Union's Global Money Transfer Index, suggesting a tendency among Africans abroad to remit more when their home country's currency weakens.  Recent financial maneuvers, including the settlement of a significant portion of a $2 billion Eurobond and securing loans from the IMF and Trade Development Bank, have injected confidence into the Kenyan economy.
Bullish shilling cuts money sent home by Kenyans abroad

Kenya experienced a slight dip in remittance inflows in February 2024, recording $385.9 million (Sh52.2 billion), marking a 6.4% decrease from January's historic high of $412.4 million. Despite the monthly decline, the year-on-year comparison shows a robust 24.8% growth from February 2023's $309.2 million (Sh41.8 billion). This data, as per the Central Bank of Kenya (CBK), underscores the significant role of diaspora contributions to the national economy.


Over the past 12 months leading to February 2024, total remittances reached $4,330 million, a 7.5% increase from the preceding year's $4,026 million, further highlighting the steady rise in diaspora investments. The United States continues to be the largest source of these remittances, contributing over half of the total inflows.


The depreciation of the US dollar against the Kenyan shilling is perceived as a potential factor for the reduced remittance volume in February. A stronger shilling reduces the relative value of dollar remittances, possibly influencing diaspora Kenyans to send less. This aligns with insights from Western Union's Global Money Transfer Index, suggesting a tendency among Africans abroad to remit more when their home country's currency weakens.

Recent financial maneuvers, including the settlement of a significant portion of a $2 billion Eurobond and securing loans from the IMF and Trade Development Bank, have injected confidence into the Kenyan economy.


These actions have contributed to the shilling's appreciation and helped maintain the country's forex reserves at adequate levels, despite a slight month-on-month decrease.

As Kenya navigates through these economic dynamics, the resilience and growth of remittance inflows remain crucial for the nation's financial health and stability.

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