The shilling was posted at 84.30-50 per dollar at the 1300 GMT market close, unchanged from Thursday's close.

"There is a bearish tone on the shilling as yields fall it's less attractive to hold the currency," said Raphael Owino, a senior trader at Commercial Bank of Africa.

Yields on the benchmark 91-day Treasury bill fell to 7.515 percent on Thursday even though demand was low, from a high of close of 21 percent at the beginning of the year.

Kenya's central bank slashed its key lending rate by 350 basis points to 13 percent this month and economic analysts expect further loosening.

Chris Muiga, a senior trader at Kenya Commercial Bank, said it would likely be four to six months before growth in imports as a result of cheaper credit translated into an uptick in inflationary pressure.

Traders said they expected the central bank to continue mopping up liquidity through repurchase agreements and use other open market tools to support the shilling.

On Friday central bank which sought to mop up 16 billion shillings ($190 million), received bids worth 13.48 billion shillings and accepted them all.

In stocks, the main NSE-20 share index was barely changed, slipping 0.30 point to 3,953.53 points, while the Nairobi All Share Index eased 0.7 percent to 86.61 points.

"Investor appetite for stocks remains strong going by the increased tradable volumes in the market and investor interest in the banking sector," said Ronald Lugalia, an analyst at Afrika Investment Bank.

Safaricom, the leading mobile operator and one of the most capitalised stocks fell 4.8 percent to 3.65 shillings after its shares started trading without a dividend.

Longhorn, publisher, which issued a profit warning in the previous session, shed 8.5 percent on thin volumes to 15.10 shillings.

In the debt market, 4.8 billion shillings worth of government and corporate bonds were traded, down from 5.5 billion shillings on Thursday.