Diaspora Kenyans Push for Favorable Exchange Rates in Exchange for US Dollars

According to the London Stock Exchange Group (LSEG), the Kenya Shilling is expected to decline even more against the Dollar as Kenyans abroad are seeking higher exchange rates.

According to Reuters, the shilling’s value is taking a hit from the call of Kenyans residing overseas for better exchange rates. Renowned economists Professor Fred Ogola and Nicholas Gachara state that citizens living outside the country play a vital role in determining the strength of the Shilling. Professor Ogola explains that the demand for the dollar is high, but the supply is low because Kenyans abroad are holding onto their dollars.

The weakening of the Kenyan Shilling is attributed to the mismatch between the demand and supply rates. Alongside this, the manufacturing sector's high demand for the dollar is an aggravating factor. Though the Shilling was stable in the previous week, it has recently plummeted to an all-time low of Ksh153.50 against the Dollar. This significant fall has come after an increase in foreign exchange earnings from the Kenya diaspora remittances, which show that more Kenyans are making money transfers back to their homeland.

On November 7, the Treasury stated that the continuous drop in the Shilling had come to an end, thanks to a decrease in Dollar demand from the fuel and manufacturing sectors. The Treasury attributed the slight improvement to a government deal facilitated by Kenya's Ministry of Energy, involving Saudi Aramco, Abu Dhabi National Oil Corporation Global Trading (ADNOC), and Emirate's National Oil Company (NOC).

Through this agreement, Kenya has successfully obtained fuel with a credit line extending over a period of 180 days, thereby alleviating the strain on the demand for US Dollars. Moreover, the Treasury has recognized that the administration of President Ruto has bolstered Kenya's domestic currency through the influx of funds from negotiated loans.