The largest monthly remittances ever recorded, $378.1 million (Sh54.6 million) was sent home by Kenyans living abroad in July 2023, despite the high cost of living.
The most recent Central Bank of Kenya (CBK) weekly bulletin for the week ending August 18 states that monthly remittances were $23.2 million (Sh3.3 billion) more than $345.9 million (Sh49.9 billion) in the previous month.
In total, inflows for the 12-month period ending in July 2023 rose by 2% to $4.076 billion (Sh588.4 billion), up from $3.995 billion (Sh576.7 billion) during the corresponding period in 2022.
The money that Kenyans who work outside spend to support their friends and family back home is known as the inflows.
They are also a significant source of foreign exchange (Forex),which helps to finance imports, pay debts and build reserves in addition to supporting the current account by reducing the trade deficit
“The strong remittance inflows continue to support the current account and the stability of the exchange rate. The US remains the largest source of remittances into Kenya, accounting for 55 per cent in July 2023,” CBK said. The move favours the Kenyans in the diaspora who can leverage the purchasing power of the dollar against the weaker shilling, including other major international currencies, to benefit from pushing the money back home through remittances.
According to the regulator, as of August 17, usable foreign exchange reserves were still sufficient at $7.29 billion, or Sh1.1 trillion, or 3.98 months’ worth of import cover.
This fulfills the CBK’s legally mandated duty to keep at least four months’ worth of import cover.
Cut down on turbulence To balance Kenya’s payments, affect the exchange rate, and uphold market trust, the regulator keeps Forex reserves. In essence, they serve as CBK’s reserve money, stabilizing the shilling and lowering volatility.
The shilling was steady against key international and regional currencies during the reviewed week, according to CBK, with an exchange rate of Sh144.04 for every US dollar on August 17 compared to Sh143.44 the week before. The International Monetary Fund (IMF) reports that the good news is that the worldwide economy continues to gradually recover from the pandemic and Russia’s invasion of Ukraine, but it is not yet out of the woods