NAIROBI (Reuters) - The Kenyan shilling firmed against the dollar on Wednesday as investors trimmed long dollar positions, with volumes thin in a market still seeking direction after the central bank introduced curbs on overnight borrowing. At 0745 GMT, commercial banks quoted the shilling at 89.60/80 to the dollar, 0.22 percent stronger than Tuesday's close. The Central Bank of Kenya (CBK) slashed its overnight lending rate to 6.25 percent from 8.0 percent on Tuesday while also imposing restrictions on borrowing from its discount window. "(The shilling) is trying to find direction ... no large volumes have been seen," said Chris Rwengo, head of trading at Standard Chartered Bank. "There is uncertainty in the market." The central bank said banks had been using overnight lending for regular supply of liquidity rather than as a last resort. Traders expect the market to find its footing once liquidity comes back some time next week as some government paper matures. "Liquidity is pretty thin ... Nobody wants to be caught long because funding is an issue and that is why the market has appreciated a bit," said Ignatius Chicha, head of markets Citibank. Traders said it was hard to give a range that the shilling would trade, as spreads were wide.

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