The amount of money sent back home by Kenyans working and living abroad dropped in the first month of the year.
The data from the Central Bank of Kenya shows that $427.4 million (Sh55.5 billion) was sent in January compared to $445.4 million (Sh57.9 billion) in December.
The amount is however higher compared to the corresponding month last year when $412.4 million (Sh53.6 billion).
This perhaps gives a glimpse of what should be expected in the coming months as the US implements President Donald Trump’s executive orders.
Although the regulator did not give reasons for the drop, experts are fearing that the amount will drop further in the coming months if Trump implements his tough immigration and funding policies.
The cumulative inflows for the 12 months to January 2025 increased by 16.6 per cent to $4.96 billion compared to $4.25 billion in a similar period in 2024.
“The remittance inflows continue to support the current account and the foreign exchange market. The US remains the largest source of remittances to Kenya, accounting for 53.2 per cent in January 2025.”
This boosted the country’s FX reserves, growing by usable foreign exchange reserves that remained adequate at $9.4 billion or Sh1.2 trillion (4.8 months of import cover) as of February 13.
This meets the CBK’s statutory requirement to endeavor to maintain at least four months of import cover. Meanwhile, investors gave short-term government securities a wide berth in the week ended February 14 following a further drop in return rates.
The data released by the Central Bank of Kenya shows that the government received 2,526 bids against 4,000 advertised on Thursday with returns dropping from 9.1 per cent to 8.9 per cent.
The rate has consistently dropped since November last year. Money market expert Geoffrey Lubinu predicts return rates on state securities to further drop as banks obey regulators’ orders to cut lending rates.
Several banks led by Cooperative Bank have since slashed their average lending rates by between two and three per cent to pump more money into the economy.
“Banks, which account for over half of the amount invested in state securities are expected to hawk loans to businesses and individuals, further hurting the performance of short-term government papers. Although long-term papers were oversubscribed, their returns are also shrinking,’’ Lubinu said.
