Traders were quoting wide spreads since dollar liquidity was tight, and they said they were expecting some action from central bank after it sold dollars three times last week.

The Central Bank of Kenya, scheduled to hold a Monetary Policy Committee meeting on Nov. 1, has also been in the market mopping up shillings through repurchase agreements.

"We are seeing very wide spreads due to the uncertainty in the market. The level of dollar liquidity is quite low," said a trader at one commercial bank.

"There is a bit of interest from oil importers meeting end-month dollar demand."

At 0729 GMT, commercial banks quoted the shilling at 101.65/85 against the dollar, weaker than Tuesday's close of 100.90/101.20.

Traders said a further policy tightening could also be in the offing at the MPC meeting.

"We are waiting to see what they will do. But we still expect further tightening and may be they may touch on (banks' cash reserve ratios) this time," said a senior trader at another commercial bank.

The was little immediate reaction to comments from the finance minister that he expected inflation to slow in October and that a debt management official from the ministry had been appointed as deputy central bank governor.

The bank's policy committee shocked the market with a 400 basis points hike of the central bank rate to 11 percent on Oct. 5, in a bid to tackle a rising inflation, boosting the battered shilling and countering criticism that its previous policy had been weak.