Kenyans working abroad sent home a record Sh14.6 billion in May. Remittances from Europe shot up by Sh600 million or 14.8 per cent from April, to increase the region’s contribution to 31.8 per cent of total inflows. The rise has been sparked by a rebound of inflows from Europe.
May saw heightened uncertainty in European markets as the British EU exit campaign (Brexit) picked pace. The shilling has gained 11 per cent against the dollar since the exit vote indicating those who had sent cash to the Kenyan market last month were net gainers.
“The sustained upward trend in part reflects the entry of additional money remittance providers into the market,” said the Central Bank of Kenya (CBK).
Remittances are important to Kenya as they are the largest source of foreign currency and provide the largest cushion against the country’s exchange rate.
The shilling has held steady against the dollar in the last few months allowing the CBK to ease its monetary policy with a one percentage point reduction of the indicative Central Bank Rate.
Higher diaspora remittances help narrow the country’s balance of payments deficit supporting a stronger local currency.
Remittances from the US declined by Sh340 million to Sh6.8 billion while inflows from rest of the world gained marginally to Sh3.1 billion up from Sh3 billion in April.