NAIROBI (Reuters) - Kenya's shilling extended gains for a fifth straight day on Thursday, helped by exporter dollar inflows and tightening shilling liquidity as the central bank continued to mop up the local currency, traders said. The Central Bank of Kenya said it was in the market to take out 5 billion shillingsthrough repurchase agreements. Before Thursday, the regulator had absorbed 24.95 billion shillings so far this year, and sold an unspecified amount of dollars to support the shilling. The central bank aims to support the shilling in part to bear down on imported inflation, which spiked in 2011. "There are good (dollar) inflows from across the board, in an environment of diminished (dollar) demand," Dickson Magecha, a trader at Standard Chartered said. Magecha added the shilling, which has gained more than 1 percent on the is U.S. currency this week, was also benefitting from the high level of interest rates which had slackened demand both for credit and imported goods, usually paid for in dollars. At 1115 GMT, commercial banks quoted the shilling at 85.80/86.00 to the dollar, 0.6 percent stronger than Wednesday's close of 86.20/40. "There is a feeling that we will see some tea (dollar) inflows," a trader who did not wish to be named said. "There is also low dollar demand. The tight monetary stance has created reduced money supply and lowered aggregate demand." Charts showed that a break past 85 would usher in a target of 82.80 per dollar, traders said. "Going forward, we see the local unit trading in a wider range of between 85.50/86.50," a report by Bank of Africa said. "However, the liquidity tightening stance taken by the authorities is expected to continue aiding the local unit in the days to come. Also the possibility of intervention by the CBK will give firm support to the shilling."

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