The Kenyan shilling slipped to a 13-week low on Monday and shares fell for the seventh straight session, to track weaker emerging markets due to uncertainty surrounding global monetary stimulus programs.
The shilling was also pressure by expectations the government plans to reintroduce a tax on capital gains.
At the 1300 GMT market close, commercial banks posted the shilling at 85.65/85, 0.2 per cent weaker than Friday's close of 85.50/60. It touched 85.90/86.10 during Monday's session, a level last reached on March 25.
"The flows have not been great and we could see offshore investors stay away. There's also a bit of pressure on equities and government securities, so that could all put pressure on the shilling," said Duncan Kinuthia, head of trading at Commercial Bank of Africa.
He said investors were becoming more risk averse, anticipating the unwinding of the stimulus program in the United States.
Kenya's finance minister said on Thursday that East Africa's largest economy plans to reintroduce a tax on capital gains, a move analysts say could deter foreign investors and put pressure on the shilling.
The shilling has fallen 1 per cent since June 6 as foreign investors have booked gains from 2013's 20 per cent rally in stocks this year. The currency is still 0.5 per cent stronger so far this year.
The share index fell 0.9 per cent to 4,761.89 points on Monday. It has lost 4.6 per cent since June 6.
"Speculation on whether and when the capital gain tax may be introduced continues to weigh down investor participation at the bourse," said Faith Atiti, an analyst at NIC Securities.
Mobile phone services company Safaricom fell 4.3 per cent to close at 6.70 shillings per share, while Equity Bank the country's largest bank by customers, fell 3.1 per cent to 31.25 shillings.
In debt markets, bonds worth 1 billion shillings ($11.7 million) were traded, down from 3.5 billion shilling exchanged on Friday.