Kenya’s diaspora remittances rose by 19.9 per cent in the twelve months to October compared to the corresponding period of last year, however, they were not enough to shore up the shilling.
Data from the Central Bank of Kenya (CBK) shows that the cumulative inflows for the 12 months to October 2021 totalled $3,605 million compared to $3,006 million in the same period in 2020, a 19.9 per cent increase
Diaspora inflows are the country’s largest source of foreign exchange ahead of horticulture, tea and tourism earnings providing a critical buffer for the shilling in the forex market.
“Remittance inflows totalled $337.4 million in October 2021 compared to $263.1 million in October 2020, a 28.2 per cent increase. Inflows increased by 8.9 per cent to $37.4 million in October compared to 309.8 million in September 2021,” said the CBK in its weekly bulletin dated November 12, 2021.
Consequently, Kenya’s forex reserves surged by $26 in the reporting week, on the back of high remittance inflows and possible dollar sales by CBK to cushion the shilling.
“The usable foreign exchange reserves remained adequate at USD 9,094million (5.56 months of import cover) as at November 11,” the CBK said.
“This meets the CBK’s statutory requirement to endeavour to maintain at least 4 months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover.”