Kenyans in Diaspora See Reduced Remittances Amid Stable Exchange Rates

Kenyans in the diaspora sent Sh2.3 billion less in January 2025 compared to December. Total remittances amounted to $427.4 million, with the US being the largest contributor. A stable exchange rate for the shilling has complicated remittance decisions for expatriates, although cumulative annual inflows increased significantly.

In January, Kenyans living abroad sent back Sh2.3 billion less compared to December, as reported by the Central Bank of Kenya (CBK). The remittance inflows for the month totaled $427.4 million (Sh55.2 billion), a decrease from $445.4 million (Sh57.6 billion) in December 2024. Despite this decline, January’s remittances show a 3.6 percent increase from the same month last year when inflows were $412.4 million (Sh53.3 billion).

The US remains the principal source of remittances, contributing 53.2 percent during the reported period. The CBK did not specify reasons for the drop in remittances; however, the shilling has been consistently trading at an average of 129 against the dollar. This stability leaves Kenyans in the diaspora facing difficult decisions regarding remittance amounts.

The cumulative remittance inflows for the twelve months leading to January 2025 have risen by 16.6 percent to $4,961 million (Sh641.1 billion), compared to $4,253 million (Sh549.6 billion) during the same timeframe last year. The forecast for remittances often depends on the exchange rate dynamics of local and foreign currencies. When the value of the local currency shifts, it influences the volume of money expatriates send back home.

According to Western Union’s Global Money Transfer Index, approximately 67 percent of African expatriates increase their remittances when the value of their home currency declines. Consequently, with the shilling maintaining its value against the dollar at 129.22 at the end of January, Kenyans abroad are potentially discouraged from sending larger sums back home due to unfavorable exchange rates. This implies that, for instance, a $100 remittance sent in January 2025 yields a value 19 percent lower than a year prior when the shilling averaged 160 against the dollar.

In summary, remittances from the Kenyan diaspora decreased by Sh2.3 billion in January 2025, with the US maintaining its position as the largest source of these funds. Although there was a slight annual increase in total inflows, the stable exchange rate of the shilling against the dollar poses challenges for expatriates deciding on remittances. The cumulative inflow for the past year has nevertheless shown significant growth, highlighting the ongoing support that diaspora Kenyans provide to their families and communities back home.

Original Source: eastleighvoice.co.ke