Inflation Continues to Impact Diaspora Inflows

The Central Bank of Kenya on Monday released their weekly report which showed a decline in diaspora remittances to Kenya in June 2023. 

The figure dropped to $345.9 million (Sh49 billion) from $352.1 million (Sh49.9 billion) in May, a decrease of $6.2 million (Sh879.5 million). However, this is still 6.1% higher than the $326.1 million (Sh46.3 billion) recorded in June 2022. The US accounted for the majority of the inflows at 54%. 

As of July 13, usable foreign exchange reserves were at an adequate level of $7,481 million (Sh1.06 trillion), equivalent to 4.09 months of import cover. This was a slight increase from $7,459 million (Sh1.04 trillion) in June. The CBK is responsible for managing these reserves to keep the payments system balanced, maintain a stable exchange rate, and bolster confidence in the market. 
  
“The remittance inflows continue to support the current account and the foreign exchange (Forex) market. This meets the CBK’s statutory requirement to endeavour to maintain at least 4 months of import cover,” the CBK said in its weekly bulletin. 

The shilling had a fairly constant rate in the week ending June 13, with Sh141.29 being equal to one US Dollar. Remittances are a crucial source of foreign currency for the Kenyan economy and are also helping many people to sustain their lives. Kenyans abroad are feeling the brunt of Inflation with central banks engaging in policy tightening in a bid to combat the high Consumer Price Index (CPI).

Diasporans with dependants in Kenya find themselves reducing their outflows or cutting back on meat and fresh fruits. To confront the high cost of living, Kenyans abroad have to work extra hours and take up second jobs while others are forced to cut back on their spending and send back the residual amount to their families in need.