NAIROBI (Reuters) - The Kenyan shilling firmed slightly against the dollar on Thursday, lifted by foreign investors buying into the debt market, though increased liquidity could weigh on the local currency. At 0655 GMT, commercial banks quoted the shilling at 84.05/25 per dollar, a slight gain on Wednesday's close of 84.20/30. "The shilling looks well supported by the double digit yields, which are quite attractive to investors compared to elsewhere in the world," said Dickson Magecha, a trader at Standard Chartered Bank. Demand for Kenya's 5- and 10-year Treasury bonds surged at auction on Wednesday, lifted by commercial banks shifting focus back to the debt market after returns on Term Auction Deposits (TADs) dwindled in recent weeks. In the money market, increased liquidity due to debt redemptions pushed down the weighted average interbank interest rate to 13.3 percent on Wednesday, down from 14 percent the previous day. "The market has been relative long as the amount being offered on repos are quite low. The level of liquidity will keep increasing if the mop ups are not enhanced," Magecha said.

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