By Kevin Mwanza NAIROBI (Reuters) - The Kenyan shilling firmed against the dollar on Monday, helped by agricultural exporters, mainly from the tea sector, selling dollars and the central bank absorbing liquidity, while stocks fell through the key 3,800 point level. At the 1300 GMT markets close, commercial banks quoted the shilling at 83.75/95 per dollar, 0.3 percent firmer than Friday's close of 84.00/20. "There were some inflows from the agriculture guys, particularly the tea sector and development agencies" said John Muli, a trader at African Banking Corporation. The shilling has gained 1.7 percent this year due to the central bank's tight monetary policy stance and traders said it could touch 83.50 per dollar this week, helped by the central bank mopping up liquidity using repurchase agreements (repos). During Monday's session, the central bank mopped up 3 billion shillings, after it received bids worth 8.22 billion for the 3 billion shillings it had offered. Traders said they expected the central bank to continue soaking up liquidity via repos to support the shilling after the weighted interbank interest rate fell to 9.4 percent on Friday from 14.1 percent late last month, posing a downside risk to the currency. "The central bank seems to want the rates to come down ... probably they are psychologically preparing the market for a rate cut," Muli said. The Central Bank of Kenya is scheduled to hold its next policy meeting on September 5, which some analysts expect it will use to cut the key lending rate further to ease credit and support economic growth. At the Nairobi Securities Exchange, the key NSE-20 Share Index shed over 1 percent to fall to 3,792.22 points, as 12 of the 20 constituent stocks fell in what analysts attributed to profit taking. "It was profit taking activity on high cap stocks after they announced their half year results," said Moses Waireri, an analyst at Genghis Capital. Safaricom, the country's leading telephone service provider and the most capitalised stock on the bourse, fell 1.3 percent to 3.75 shillings a share, while Barclays Bank slipped 1.1 percent to 14.25 shillings. In the bond market, government and corporate bonds worth 1.3 billion shillings were traded, down from 1.6 billion shillings on Friday.

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