In January 2025, remittances from Kenyans abroad dropped to $427.4 million, a Sh2.3 billion decrease from December. The US accounted for 53.2% of these remittances. Stabilized exchange rates affect sending patterns, although cumulative inflows showed a 16.6% annual increase, indicating overall resilience in remittance behaviors despite currency fluctuations.
In January 2025, remittances sent by Kenyans in the diaspora dropped by Sh2.3 billion from the previous month to total $427.4 million (Sh55.2 billion), according to the Central Bank of Kenya (CBK). Despite this decline, the January inflow represented a 3.6% increase compared to $412.4 million (Sh53.3 billion) in January 2024. The US continued to be the primary source of these remittances, contributing 53.2% of the total.
The Kenyan shilling has remained relatively stable against the US dollar, trading at an average of 129, leading to challenges for diaspora Kenyans when deciding on sending money home. CBK reported that the cumulative remittance inflows over twelve months up to January 2025 amounted to $4,961 million (Sh641.1 billion), a significant 16.6% increase from $4,253 million (Sh549.6 billion) during the same timeframe in 2024.
Historically, fluctuations in the exchange rate influence remittance behavior. According to Western Union’s Global Money Transfer Index, 67% of Africans abroad tend to send more money home when their local currency depreciates. A stable shilling means less urgency for diaspora Kenyans to send funds, knowing that the purchasing power of remittances might be lower compared to last year.
Despite the shilling’s increased strength by approximately 19% over the past year, expatriates might find the value of their remittances diminished. For instance, a diaspora Kenyan sending $100 to Kenya in January 2025 would find its value lower compared to previous rates, as the shilling averaged 129.22 in January 2025, an improvement from 160 in the same month last year. This dynamic portrays the complex interplay between currency value and remittance decisions.
Kenyans in the diaspora sent $427.4 million in remittances in January 2025, a decline from December yet an increase from the previous year. The Kenyan shilling’s stability poses challenges in remittance strategy for expatriates. The increase in cumulative remittances year-on-year indicates a resilience among the diaspora community despite currency fluctuations and economic conditions. Key points highlight the dependence on stable exchange rates for determining remittance behaviors and the continued significance of the US as the predominant source of these funds.
Original Source: eastleighvoice.co.ke
