Abstract
This paper investigates the effect of macroeconomic variables on variations in diaspora remittances in Kenya. Kenya has experienced a steady growth in the annual volume of diaspora remittances recorded over period. Remittances have become a major source of foreign exchange and a key driver of economic growth as underscored in the Kenya vision 2030. Quarterly trends on remittances show many variations. The analysis using OLS Model revealed that, exchange rates, interest rates, inflation rates and real GDP jointly were responsible for the variation in the value of diaspora remittances at R 2 of 63.36%. There is a direct relationship between exchange rates, interest rates and diaspora remittances, while indirect relationship between inflation rate and diaspora remittances. Real GDP rates have no significant relationship. Policies to limit foreign exchange market intervention would allow capital flows to stabilize by the exchange rate movements from medium to long-term periods, thus eliminating the effects on the interest rate structure.
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