The shilling gained some 7 percent last week after the central bank mopped up 6.25 billion shillings ($74.6 million) in three consecutive sessions through repurchase agreements.

At 0641 GMT, commercial banks quoted the shilling at 83.65/85 against the dollar, barely changed from Friday's close of 83.70/90.

"There is not much activity at the moment ahead of the Christmas break. If central bank will be in it will strengthen the shilling further," said Pally Muchiri, a trader at Co-operative Bank.

The shilling's next resistance level would be 83.00 to the dollar, traders said.

The shilling is 21.8 percent off a record low of 107 hit in October after the central bank adopted a monetary tightening stance that has seen the benchmarket central bank rate raised by 11 percentage points since Oct. 5 to 18 percent.

The local currency is still down 3.8 percent this year.

Tight shilling liquidity pushed the weighted average interbank rate up to 16.6 percent on Friday from 13.6 percent on Thursday.