Traders also said the Greek election result may have given a lift to the shilling by encouraging risk appetite.

At 0719 GMT, commercial banks quoted the shilling at 84.60/80 per dollar, up from Friday's close of 84.70/90.

Besides aggressive mopping up of liquidity from the market, the central bank got a boost to its hard currency reserves, when the government received the tranche of $360 million from international lenders over the weekend.

A senior government official told Reuters the funds were received on Sunday and they had pushed the central bank's foreign exchange reserves to a five-year high.

Though the loan will be used to fund a range of infrastructure projects, the government exchanged the dollars received for local currency from the central bank.

Traders said risk appetite had returned after Greece's election delivered a slim majority to pro-bailout parties, a result seen as crucial to European leaders' efforts to hold the euro together.

Typically, when the euro gains against the dollar, it affects the shilling as investors buy into assets perceived to be risky in emerging and frontier markets.

"The shilling could have gained because of risk on" (after the Greek election, said Duncan Kinuthia, head of trading at Commercial Bank of Africa.

"It's possible when we get to 84.50 guys will come in buying dollars. So we could trade in a range."