The Central Bank of Kenya (CBK) injected dollars into the market on Monday after the shilling hit 3 1/2-year lows against the U.S. currency, traders said.
The shilling rose to 101.90/102.00 by the 1330 GMT close of trade from an intraday low of 103.85/95 before the intervention, they said. The central bank had pumped an unspecified amount of dollars into the market through commercial banks and brokers
"They (central bank) sold to me about 10 minutes ago," said a trader with a commercial bank.
Down about 14 per cent against the dollar this year, the shilling has been under pressure from a wide current account deficit and a slump in tourism caused by a spate of attacks by Somali Islamists.
Like other frontier and emerging-market currencies, the shilling has also been weakened as the dollar gained on expectations the U.S. Federal Reserve will start raising interest rates this year.
In the stock market, the benchmark NSE-20 share index shed 3.70 points to close at 4,723.26 points, extending its recent losses.
Kenyan shares have been dropped in recent months as investors sought safety in cash and less riskier assets in developed markets.
In the debt market, bonds worth 40 million shillings were traded, up from Friday's volume of Sh32.8 million.