At the 1300 GMT market close, leading commercial banks posted the shilling at 85.90/86.00 per dollar, unchanged from the previous day's close.

"We could take out 86.00 and head to 86.50 against the dollar," said Christopher Muiga, a senior trader at Kenya Commercial Bank.

"Demand will definitely outweigh supply and the current account deficit keeps growing and this will definitely lead to a weaker currency."

The current account deficit stood at just over 11 percent of the gross domestic product in May, viewed as high by policymakers and creating potential pressure on the exchange rate.

On the Nairobi Securities Exchange, the benchmark NSE-20 Share Index fell for a second straight session, down 0.3 percent to 4,128.62 points.

Safaricom, one of the most capitalised stocks on the bourse, accounted for more that half of the day's traded volume. The country's leading mobile service provider dropped 2 percent to 4.90 shillings a share.

"Safaricom is falling following investor's reaction to the cut in calling rates, which many speculate will injure the company's earnings," Sterling Investment Bank said in daily note.

Kenya's telecoms regulator cut the rate mobile phone operators charge each other for calls made across networks by 35 percent on Monday, which is expected to hurt the top operator's revenue.

In the debt market, the yield on the 182-day Treasury bills fell to 9.336 percent from 9.773 percent last week, while the yield on the 364-day bills also on sale at the same time fell to 11.709 percent from 11.943 percent previously.