At the market's 1300 GMT close, commercial banks posted the shilling at 83.85/84.05 per dollar, slightly up from Friday's close of 84.00/20.
"Demand for dollars (from importers) has reduced a lot and the mopping by central bank is supporting the shilling," said John Muli, a trader at African Banking Corporation.
"Clients had bought (dollars) towards the rate cut in anticipation that the shilling will fall afterwards. They will come to buy (dollars) if the shilling firms further."
The central bank's enhanced open market operations have offset the impact of a 150 basis points policy rate cut to 16.5 percent on the shilling.
During Monday's trading day, it absorbed 5 billion shillings ($59.6 million), having received bids worth 11.02 billion shillings for its 5 billion shilling offer of seven-day, 14-dy, 21-day and 28-day repos.
A build up in hard currency reserves to a five year high, thanks to a $360 million loan tranche from international lenders in mid June, have also made the central bank's job of ensuring foreign exchange rate stability a bit lighter.
"The improved CBK FX reserves and the intention to combat inflation should help keep the unit supported," Citibank said in a note to its clients.
At the Nairobi Securities Exchange, the benchmark NSE-20 share index drifted down slightly for the second trading day in a row, shedding two and a quarter points to close at 3791.06 points, as it pulled back from its 12 months high hit last week.
"There isn't much selling pressure so the correction will be shallow," said independent trader and analyst Aly Khan Satchu, who expects the index to rally to above 4,000 points by the end of the year.
He cited a shift of funds from the fixed income market into shares on the back of falling interest rates and supportive corporate earnings for the forecast.
During the session, investors turned to small caps where they are seeing value due to lower valuations compared with the blue chips, which have enjoyed a good run this year.
Internet service provider AccessKenya led the gainers, adding more than 5 percent to 5 shillings a share, thanks to its low attractive trailing price to earnings ratio of 9.
Most blue chip firms at the bourse have a price to earnings ratio in the double digits.
In the debt market, government bonds worth 714 million shillings were traded, up from 425.1 million shillings on Friday.