This archive report was first published on 24 September 2019.
Published on September 24, 2019, the Kenyan shilling is facing increased pressure as diaspora remittances declined for a second straight month in July and August.
Remittances, which account for the largest share of Kenya's foreign inflows, have been a crucial bulwark for the shilling against the dollar. However, their decline has raised concerns about the currency's stability.
The Central Bank of Kenya (CBK) reported that remittance inflows for August stood at $214 million (Sh22.2 billion), a 4.5 percent decline from July 2019's $224 million (Sh23.3 billion).
Despite the decline, cumulative inflows for the first eight months of the year rose slightly from $1.809 billion (Sh187.8 billion) in 2018 to $1.888 billion (Sh196 billion), reflecting the high remittances in the first half of this year.
The slower flow of dollars comes at a time when they are most needed, given the pressure the shilling is experiencing due to demonetisation and rising oil prices caused by geopolitical tensions in the Middle East.
Commercial banks were trading the shilling at an average of 103.80 on Monday afternoon, compared to Friday's closing average of 103.70 units to the greenback.
The market has been experiencing excess liquidity, forcing the CBK to mop up large amounts in open market operations. On Monday, the CBK was in the market for Sh60 billion in seven-day repurchase agreements, managing to mop up Sh40.05 billion from banks at an average rate of 8.98 percent.
