Shilling Edges Lower Despite Strong Diaspora Remittances

The Kenyan shilling weakened marginally against the U.S. dollar in the week ending 12 March, trading at KSh129.30, up from KSh129.20 a week earlier, according to the Central Bank of Kenya (CBK). 

The currency averaged KSh129.23 during the week. The shilling’s performance came as the US Dollar Index rose 0.4 percent, reflecting heightened demand for safe-haven assets amid geopolitical tensions in the Middle East. The US–Israel conflict involving Iran has disrupted global trade flows and added volatility to commodity markets.

Remittance inflows provided some support for the currency. Transfers from the Kenyan diaspora increased to KSh53.4 billion (USD 412.7 million) in February, an 8 per cent rise compared with February 2025. This marked the end of a three-month period of year-on-year declines. On a month-to-month basis, however, inflows fell 3.4 per cent from January’s KSh55.3 billion. 

Analysts described the recovery as cautious but noted that inflows remaining above USD 400 million is positive. Over the 12 months to February, remittances totalled KSh653.3 billion (USD 5.05 billion), up 1.9 percent from the previous year. The CBK highlighted that these inflows continue to support Kenya’s balance of payments and strengthen its external position.

Foreign exchange reserves stood at KSh1.8 trillion (USD 14.46 billion) as of 12 March, covering 6.2 months of imports. This exceeds the statutory minimum of four months, although reserves were slightly lower than the previous week’s KSh1.89 trillion.

Global market developments added further pressure. Oil prices rose sharply, with Murban crude reaching USD 92.13 per barrel from USD 76.25 a week earlier, driven by supply concerns linked to the Middle East conflict. Higher energy costs could fuel domestic inflation, potentially testing the shilling’s stability.