Kenyans living and working in foreign countries have increased the amount they send back home.
Data from the Central Bank of Kenya (CBK) showed that diaspora remittances for October 2023 grew to USD 355.6 million (KSh 54.2 billion based on the current exchange rate).
Why Kenyans abroad sent more money home
This represented a 6.9% growth from USD 332.6 million (KSh 50.7 billion) reported during a similar period in 2022.
“The cumulative inflows for the 12 months to October 2023 totalled USD 4,165 million (KSh 634.9 billion) compared to USD 3,996 million (KSh 609.2 billion) in the same period in 2022, an increase of 4.2%,” read the CBK report in part.
The regulator noted that the US remained the largest source of remittances into Kenya, accounting for 54% in October 2023.
Kenya shilling continues to fall
This is despite the continued depreciation of the Kenya shilling against the US dollar.
CBK report showed the shilling traded at an all-time low of KSh 152.11 against the dollar as of Thursday, November 16.
In October 2023, CBK governor Njuguna Ndung’u said the shilling is overpriced by 25% and the regulator had nothing to do but watch as it continues on a free fall.
“I think for several years now, we have had an overvalued exchange rate, in fact, if you go back six years ago there was a raging debate as to whether the Kenyan shilling exchange rate was overvalued and at that time the Bretton Woods institutions felt that actually the exchange rate was overvalued by anywhere between 20 to 25%,” said Thugge during a meeting with MPs, as quoted by the EastAfrican.
Rising interest rates
Kamau attributed the decline in the value of the shilling to the rising US interest rates and Kenya’s rates which had remained unchanged for a while.
“The CBK did not raise the interest rate considerably and there were capital outflows which affected the exchange rate,” he said.
Thugge increased Kenya’s bank base lending rate to 10.5% as he sought to tighten the monetary policy to ease inflation and pressure on the shilling.
CBK retained the rate in October 2023, projecting a fall in inflation to below the target range of 7.5%.
Press release: Monetary Policy Committee Meeting pic.twitter.com/vYGMRG6OvL
— Central Bank of Kenya (@CBKKenya) October 3, 2023
Kenya’s inflation hit 6.9% in during the same month under review, attributed to the rising cost of food and fuel.