A study on the relationship between remittance inflows and local currency movement in Kenya

Abstract

This study seeks to shed some light on the relationship between movement of local currency and migrant remittances into Kenya, investigating if at all a relationship exists, and if so, the impact of that relationship on the Kenya Shilling. this investigation is done on the backdrop of the effects of local currency appreciation in foreign countries, whereby Foreign Direct investment (FDI) as an inflow has been observed to have an appreciatory effect on the recipient country's local currency. For Kenya, major currency appreciation would reduce export competitiveness and potentially make the country's poor balance of payment position worse.