The shilling is expected to gain this week, pushed up by increasing demand for the local currency to meet some month end obligations by corporate firms, leaving the dollar trading at a relatively low note.
The Standard Chartered Bank Daily Market Commentary said in its market report yesterday that the increased demand for the shilling was expected to continue, coupled with low to medium market volatility.
Similarly, the Barclays Bank market report showed that the fulfillment of local obligations by key players in the market during the week would boost demand for the local currency.
The bank said that the dollar fell to eight-and-a-half-month lows against the euro and a basket of currencies on expectations that the US Federal Reserve may delay scaling back its monetary stimulus following this month's political battles over the budget.
Analysts say concerns over the negative impact on the US economy and the likelihood of the Fed would leave its bond buying programme intact until well into next year would weigh on the dollar.
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